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BEIJING: Tesla Inc. needs to brace for another setback after China included electric cars among American products that it would hit with additional tariffs in a counter-punch to the U.S.
Other American auto imports also made the list of products China is threatening including SUVs, which could even impact BMW AG and Daimler AG. But Tesla is at particular risk. The Elon Musk-led carmaker relies on U.S.-built vehicles for all its Chinese sales, whereas U.S. carmakers General Motors Co. and Ford Motor Co. manufacture in China and import few vehicles into the world’s biggest market.
China’s announcement adds to a tough past few weeks for its Musk and Tesla investors, with a flurry of negative news dragging on the company’s shares. China is Tesla’s biggest single market after the U.S., and an additional tariff would hand local electric-vehicle manufacturers even more of a 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.”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 finalized because the two sides disagree on the ownership structure for a proposed factory, people with direct knowledge of the situation said in February.
The U.S. carmaker is already hindered by China’s current 25 percent import tax that catapults the sticker prices of Model S sedans and Model X crossovers beyond the means of most consumers. An additional duty would further relegate Tesla into a niche marque only afforded by the most wealthy.
