China agrees to Tesla remedy for Model 3 customs dispute, report says


Reuters

Automotive News | 2019-3-8

SHANGHAI -- China's customs authorities have accepted Tesla Inc.'s plan to remedy problems with the clearance of imported vehicles, a source familiar with the matter told Reuters on Tuesday.

Caixin,  a Chinese financial publication, reported earlier that authorities had suspended customs clearance for the electric carmaker's Model 3 sedan, citing various irregularities, including improper labeling of the vehicles.

Tesla blamed a misprinted label for the issue.

"We have already reached a resolution with Chinese customs, and we are working closely with them to resume clearance procedures on these vehicles," a Tesla spokesperson said in a statement.

"Sales of Model 3 in the country are not impacted, and we continue to deliver Model 3 vehicles that have already been processed."

Making inroads in China, the world's largest electric vehicle market, is crucial for the Silicon Valley carmaker as it seeks to offset softening demand in the United States and convince investors of its ability to become consistently profitable.

"Selling into China has clear hurdles and this is a reminder of the pitfalls when betting on growth in the region," Wedbush Securities analyst Daniel Ives said.

CEO Elon Musk has played up the support Tesla is getting from Chinese authorities as the company invests in the country's first wholly foreign-owned car plant in Shanghai, due to come online later this year.

Until then, Tesla has to import U.S.-made cars with substantial customs duties, putting it at a disadvantage against locally-made, government-subsidized EVs from rivals such as Nio Inc., Byton and XPeng Motors.

Stepped up inspections
Caixin said the Shanghai customs authority told Tesla in an official notification on March 1 that it should not sell or use Model 3 vehicles that had already been cleared.

The authority has also urged inspectors at all ports responsible for importing vehicles to step up inspections of other imported Tesla models and suspend their release if similar problems are uncovered, the report added.

A total of 1,171 Model 3 sedans arrived at north China's Tianjin Port, after 84 such cars were imported via the port in February, China's state news agency Xinhua reported on Tuesday.

The first shipment of Model 3 cars arrived in Shanghai on Feb. 22, and deliveries started at the end of the month, according to local media reports.

Tesla's Shanghai factory, made possible by raising funds from local banks at low interest rates, plans to start making Model 3s at the end of this year and eventually produce cars at a rate of 10,000 per week.

Tesla has cut prices in China several times in the last few months to make its cars "more affordable" and revive sales hit by Sino-U.S. trade tensions.

To cut costs and support its drive to generate profit, Tesla last week launched a $35,000 version of its Model 3 sedan and said its global sales would now be online-only. 





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