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Tesla Starts Local Chinese Production Of Model 3, Avoids Trade Tariffs

Tesla Starts Local Chinese Production Of Model 3, Avoids Trade Tariffs
United States based electric car maker Tesla is now manufacturing all the Model 3 sedans sold in Chinese market at its Shanghai plant thereby adding two more variants of the Model 3. This means that all of the cars that it is selling in China are now locally manufactured and hence are no more subject to import tariffs imposed on American imports by China as a part of the US-China trade war.
This new development by Tesla comes at a time when the US-China trade war is at its flag end with both the countries having signed an initial trade deal also referred to as the Phase One trade deal. The trade war had seen tariffs being imposed by both countries on goods and services ranging from metals to cars. These tariffs had resulted in an increase in price of products in both countries.
This move also is a cause of relief for Tesla because it has now temporarily suspended production at its San Francisco Bay Area plant because of the impact of the coronavirus pandemic. The company plans to restart production at the factory from May 4.
The Shanghai-made Long Range Model 3 cars, priced 339,050 yuan after subsidies, will start being delivered from June this year according ot the plans of the company, Tesla said.
The locally made Model 3 for the Chinese market has a rear-wheel drive and a a driving range of over 600 kilometres on a single charge and is different from the ones that were previously imported from the US which were all-wheel drive versions and had a starting price of 439,900 yuan.
The California-based automaker said that the price of the Performance Model 3, to be priced 419,800 yuan, and made locally at the Chinese factory will be started to be delivered from the first quarter of next year, the company plans. Tesla however did not specify the price of the vehicles after subsidies. The price of the imported Performance Model 3 vehicles was at 509,900 yuan.
This new product strategy of the company is different from the one that was previously mentioned by Tesla’s the billionaire chief executive, Elon Musk which comprised of manufacturing only the more affordable versions of the Model 3 sedans at the Shanghai factory which was built at a cost of $2 billion.
In March, Tesla sold 10,160 vehicles compared to sale of 3,900 vehicles in February. That was the highest-ever monthly sales for the company in the largest auto market of the world.
The pay for global vice presidents in China will be cut by 30 per cent, Tesla also said, and added that there will also be a reduction of 20 per cent in the salaries of its China-based director-level executives in order to make them at par with its operations in the United States. The company said that there will be no change in salaries of other China-based employees.

Christopher J. Mitchell

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