China tariffs impact Tesla

Bloomberg

Tesla Inc. needs to brace for another setback after China included electric cars among American products that it’s targeting with additional tariffs in its counter-punch to the US.
While other autos imported from the US were also on the list, including most types of SUVs, Tesla is at a particular risk because it relies on American-made vehicles for all
its Chinese sales. Other US carmakers such as General Motors Co.
and Ford Motor Co. manufacture in China.
China’s announcement adds to a tough past few weeks for Chief Executive Officer Elon Musk and Tesla investors, with a string of bad news hurting the company’s shares. China is the carmaker’s biggest single market after the US, according to data compiled by Bloomberg, and an additional tariff threatens to give local manufacturers further pricing edge.
“The jump in tax levy hurts Tesla the most as it had not yet started local production in China,” said
Cui Dongshu, the secretary general of China’s Passenger Car Association. “For GM and Ford, they can always make up with China-produced ones.”
A Tesla spokeswoman based in Beijing wasn’t immediately available to comment.
Tesla has been working with Shanghai’s government since last year to explore assembling cars in China, but has yet to clinch a deal. An agreement hasn’t been finalised because the two sides disagree on the ownership structure for a proposed factory, people with direct knowledge of the situation said.
The US carmaker is already hindered by China’s current 25 percent import tax that catapults the sticker price beyond the means of most consumers.
An additional duty would further relegate Tesla into a niche marque only afforded by the most wealthy. Tesla sold 14,883 vehicles in China in 2017, accounting for just 3 percent of the nation’s battery-powered EV sales and placing it as the No. 10 brand.