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Tesla started a new leasing company in China



Tesla has registered a new business leasing company in China today because it tries to maintain its business in an important market until it can build local production capacity.

According to an archive with the China National Company Information Publicity System which was first reported by Reuters, Tesla registered the business in the Shanghai free trade zone, as well as for companies registered to build Gigafactory 3.

The company can operate in "leasing and consulting", according to the document.

Zhu Xiaotong, head of Tesla in China, is registered as a representative for the company, which has a registered capital of $ 30 million.

That came after Tesla had a number of complicated months in the country because of the trade war that the Trump administration launched against China.

Back in May, Tesla reduced the price by 40,000 yuan to 90,000 yuan (~ $ 6,000 to ~ $ 14,000 USD) depending on the model in China.

The automaker did so in preparation for the planned reduction of the 25% import duty imposed on Tesla vehicles in China down to 15%.

But it backfired when the trade war began to increase and in July, Tesla had to raise the price of the Model S and Model X by more than $ 20,000 in China because of the tariffs for the new trade war.

The company became the subject of up to 40% of the import duty for the vehicles it sent in that country from California.

Last month, Tesla again reduced its vehicle prices in China by 12 to 26%, but the automaker said that it absorbed the difference this time.

But the automaker's timing was good since Trump said that China agreed to lower rates on US cars last week.

While they did not permanently lower rates, China confirmed that it would "suspend additional tariffs for US vehicles and auto parts for three months starting January 1, 2019."

This means that rates must, at least temporarily, return to 25% for the first quarter of 2019.

Even though Tesla has reduced the price of Model S and Model X before the announcement, they adjust prices again to reflect changes.

This weekend, Tesla has also adjusted Model 3 prices in China for now starting at 499,000 yuan (~ $ 72,000).

Despite a reprieve, Tesla still found himself at a cost loss with other companies on the market and is now trying to maintain demand until local manufacturers fix the loss of costs.

They aim to have a Gigafactory 3 production site ready for "some parts of Model 3 production" as soon as next year, but the production of complete vehicles is actually not expected for several more years.

When it first announced the plant, Tesla said they expect "construction to begin in the near future" and that "it will take about two years" until they start producing vehicles and "then another two or three years before the factory fully ramped up. around 500,000 vehicles per year for Chinese customers. "


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