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    First production model of Tesla Model 3 out the assembly line is seen in this undated handout photo from Tesla Motors.

    Only the First Chapter: Tesla Raises EV Prices in China Amid Trade War With US

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    US President Donald Trump’s protectionist economic policies triggered a trade war with China and the EU. Beijing has already imposed retaliatory tariffs against US exports, and there’s no indication the trade war will let up anytime soon.

    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.

    READ MORE: US-China 'Trade Skirmishes' Could Become a Global Trade War — Specialist

    "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.

    Earlier this week, BMW announced it would be hiking the price of its US-manufactured cars in the Chinese market due to Beijing’s tariffs, which were imposed in retaliation to Donald Trump’s similar trade protectionist measures.

    Washington’s tariffs rendered Chinese exports less competitive in the US market, and Beijing has now followed suit.

    READ MORE: Analyst on China Tariffs Cuts for Asian Countries: 'There Will Be More'

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    Tags:
    electric vehicles, tariffs, US-China trade war, Tesla, US government, World Trade Organization (WTO), Elon Musk, Donald Trump, China, United States
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