Tesla rolls out Model 3 in China ahead of schedule

A Tesla Model 3 car leaving a cargo vessel at a port in Shanghai yesterday. The California-based firm has already adjusted prices and added a cheaper Model 3 variant to its line-up to make its US-made cars more affordable in China amid high import ta
A Tesla Model 3 car leaving a cargo vessel at a port in Shanghai yesterday. The California-based firm has already adjusted prices and added a cheaper Model 3 variant to its line-up to make its US-made cars more affordable in China amid high import tariffs and competition from other carmakers.REUTERS

BEIJING/SHANGHAI • Tesla has begun delivering Model 3 cars in China slightly ahead of schedule, as it looks to revive its sales that have been hit hard by Sino-US trade tensions.

The California-based firm has already adjusted prices and added a cheaper Model 3 variant to its line-up to make its US-made cars more affordable in China amid high import tariffs.

The US luxury electric vehicle maker said in a statement that it held a delivery event in Beijing yesterday that "marked a significant milestone for the market".

It had initially projected a March start for Model 3 deliveries in China - the world's biggest car market, where overall car sales contracted last year for the first time in more than two decades.

The initial deliveries will go to buyers who placed their orders before the end of last year, Tesla said. Those who ordered this year will start getting their cars from the end of next month.

"I see its earlier-than-expected delivery as an effort to try and seize the market as quickly as possible" amid mounting competition, said Mr Alan Kang, an analyst at LMC Automotive.

"Many of its potential customers will be considering not only Tesla's Model 3, but also other electric car models like Jaguar's I-Pace or those from Audi and Mercedes-Benz," the Shanghai-based analyst added.

 
 
 

While car sales in China have waned as the economy slowed, Tesla's business was hit hard after Beijing raised tariffs on US car imports to 40 per cent in July amid the trade row. China has since temporarily suspended the additional tariff, reducing it to the 15 per cent level.

Tesla currently imports all the cars it sells in China, but is building a factory in Shanghai that will manufacture Model 3 cars in the initial phase and help it minimise the impact of the trade war.

The United States and China are in the midst of talks aimed at resolving their trade dispute. If the two sides fail to reach an agreement by March 1, US tariffs on US$200 billion (S$270 billion) worth of Chinese imports are set to spike to 25 per cent from 10 per cent.

Tit-for-tat tariffs between the world's two top economies have upended international trade flows.

Tesla's early delivery comes as the carmaker was dealt a setback on Thursday after Consumer Reports, an influential US magazine, withdrew its endorsement for Model 3, citing reliability problems.

The magazine's move, less than nine months after recommending the electric sedan, raised questions about quality that Tesla has faced since the model's launch.

REUTERS

A version of this article appeared in the print edition of The Straits Times on February 23, 2019, with the headline 'Tesla rolls out Model 3 in China ahead of schedule'. Print Edition | Subscribe