American electric vehicle manufacturer Tesla has hiked the prices of its model range available in the Chinese market, making the California-based firm the first car manufacturer to be hit by the ongoing trade war, Deutsche Welle reported on Tuesday.
The price of its top of the range Model X was increased by around 20 percent to 1.57 million Yuan (around $240,000 at the current CNY/USD exchange rate), up from 1.32 million ($200,000) prior to the tariffs.
"It's only the first chapter of this story," IHS Markit analyst James Chao said in a report, warning that other manufacturers are likely to be equally affected by the tariffs unless they can circumvent them, potentially by transferring production, or at least some operational functions, to China.
China is a key market for Tesla and carmakers in general, with the Chinese market accounting for 20 percent of Tesla’s turnover in 2017.
As the company produces all of its vehicles in California, it is unable to bypass the tariffs, while others may be able to do so if they have existing production facilities in China, or can swiftly relocate production there.
Tesla is actively looking to set up a factory in China, but is yet to receive permission from Beijing.
A joint venture (JV) agreement with a local firm is another option, but Tesla is likely to only employ such a deal as a last resort, as CEO Elon Musk doesn’t want to share the company’s intellectual property.
Washington’s tariffs rendered Chinese exports less competitive in the US market, and Beijing has now followed suit.