NEW YORK - Tesla Inc. has raised prices on its Model X and S cars by more than $20,000 in China, automotive news website Electrek reported on Monday, making it one of the first U.S. carmakers to hike prices in the wake of rising trade tensions.
China slapped tariffs on U.S. car imports on Friday in response to President Donald Trump’s move to impose duties on $34 billion worth of Chinese goods.
Tesla has been banking heavily on China, the world’s largest automotive market, to boost sales of its electric cars and has plans to build a factory in the country.
In May, the company slashed up to $14,000 off its Model X in China after Beijing said it planned to reduce import duties to 15 percent from 25 percent for most vehicles from July 1.
China contributed about 17 percent to Tesla’s total revenue in 2017 and the electric car maker ships an estimated 15,000 cars a year to the country.
“Raising prices is going to hurt sales, but money losing Tesla has to raise prices because they can’t afford to fully absorb to the higher costs of tariff,” CFRA research analyst Efraim Levy said.
“Considering they claim to be capacity constrained, they should be able to shift sales elsewhere.”
Prices of the Model S and Model X were increased over the weekend by 150,000 yuan to 250,000 yuan ($22,600-$37,600) depending on the version, Electrek electrek.co/2018/07/09/tesla-increases-price-model-s-model-x-china-new-trade-war-tariffs reported.
Tesla Chief Executive Officer Elon Musk is visiting Shanghai and Beijing this week, Bloomberg reported on Monday, citing people familiar with the matter. The report added that details of the trip were not immediately available.
Tesla did not respond to requests for comment.
The company’s stock was up marginally at $311.74 after pairing early most of its gains.
Tesla has been grappling to reverse production shortfalls for its cheaper Model 3 electric sedans, confronting reports of crashes involving its vehicles and facing increased skepticism over its finances.
“I wouldn’t wonder if Tesla is going to hike the prices in general, because the money is getting shorter and shorter. Cutting 9 percent of the jobs was a similar sign. I can’t imagine, that Tesla can be in the black before 2020,” said Frank Schwope, an analyst with NORD/LB.
In order to keep pumping out the Model 3, the performance of which is essential to put Tesla on a path to profitability, the company tapped workers from other departments, disrupting production of the Model S and X lines.
Tesla said last week it now expects to boost production to 6,000 Model 3s per week by late August, signaling confidence about resolving technical and assembly issues that have plagued the company for months.
Other automakers could follow Tesla in raising prices, Levy said.
Ford Motor Co., however, said on Thursday it would not hike prices on its imported cars for now, crimping its profit margins on cars imported to China.