China grants Tesla Inc electric vehicles 10 percent purchase tax exemption which the country gives only to selected automakers, the Ministry of Industry and Information technology (MIIT) announced.
The exemption waived automobile taxes that were supposed to be imposed on 16 electric vehicles models that Tesla will be selling in China. These models include Model S, Model X, and Model 3. By large, the exemption includes Tesla's cars categorized as "new energy vehicles."
Tesla has scored big with the exemption given that China is the automaker's largest new market. The 10 percent deduction would also mean that Tesla would not be compelled to sell its vehicles at an extra cost in the country. For buyers, that would mean that they can buy their Tesla cars with more than $13,000 price reduction. Further, the 10 percent exemption is a welcome development as it takes place amid the escalating China-US trade war.
The statement from Chinese officials did not explain why it granted Tesla exemption. The automaker has also yet to confirm or deny the reports.
Tesla shares, nonetheless, is reacting positively to the news. Its shares jumped 4 percent to $230.65 as of press time.
One factor behind China's decision to exempt Tesla may have been because of the ongoing construction of its factory in Shanghai. The said facility is Tesla's first overseas factory which the electric vehicles maker plans to launch with strong marketing campaigns which include racing events and strings of parties.
The Shanghai facility is where the Model 3 will be manufactured. The location is also where the Model Y sport utility will be built for a target 2020 launch.
As mentioned. China is Tesla's largest new market. It sold about 21,000 units in the period between January and June this year.
The tax exemption is actually not exclusive for tesla. According to a list from the Ministry, Mercedes, General Motors, Volkswagen, Toyota, and Hyundai are also exempted from the purchase tax.
Meanwhile, Tesla founder Elon Musk was in China in the same week that China made the announcement. Musk was a guest for the World AI Conference held in Shanghai. He had a talk and a debate with China's richest man Jack Ma about the threats of artificial intelligence.
While in China, Musk also met with Xiao Yaqing, head of China's State Administration for market regulation. The Tesla founder has also presented his other business related to creating underground tunnel transportation. Tesla is said to have shared the concept of underground transportation as an answer to traffic.
