Freeze on Tesla Sales in China
Synopsis
Elon Musk has been a staunch supporter of President Donald Trump. He has not, however, been a fan of his tariff policies. Probably due to the fact that China is Tesla’s second biggest market…
Elon Musk has been a staunch supporter of President Donald Trump. He has not, however, been a fan of his tariff policies. Probably due to the fact that China is Tesla’s second biggest market behind the US. Tesla has already been under pressure from competition by Chinese competitors such as BYD. Now, in the wake of reciprocal Chinese tariffs, Tesla sales in China have been put on hold. Two of their flagship models manufactured in the United States have had the ”order button” removed from the site in China.
From Bad to Worse
On Friday, both the Model X and Model S can no longer be ordered on the Tesla website; only stock of the models that are all ready in inventory are available. Tesla has not yet offered an explanation to Chinese customers. Since this the US has further raised tariffs on China to a total of 145%. The asian manufacturing powerhouse has responded by raising its US tariffs another 41%.
Neither side looks likely to back down as the trade war looks likely to escalate. This is not good for Tesla as its position in the chinese market already looks tenuous.
Tesla has been developing a close relationship with the Chinese government for some time. Its Shanghai Gigafactory was the first car factory in China to be fully foreign-owned, bypassing the usual requirement for a domestic partner.
Elon Musk has also cultivated strong ties with senior Chinese officials, including Premier Li Qiang, who previously served as Shanghai's top leader.
However, Tesla has faced challenges in China’s competitive market. In March, sales of its China-made vehicles dropped by 11.5% compared to the same time last year, according to the China Passenger Car Association. Meanwhile, its main rival, BYD, saw a 23% surge in sales during the same period. This freeze on Tesla sales in China surely will not help to compete as Chinese EV (electric vehicle) manufacturers continue to expand and eat into Tesla's market share.
Sources
The New York Times - Tesla Halts Orders in China on U.S. Imported Models
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