Tesla Gets 10 Per Cent Purchase Tax Exemption From China

The Chinese Ministry of Industry and Information Technology (MIIT) says it will exempt Tesla’s electric vehicles from its 10 per cent purchase tax, Reuters reports.

There’s no word on why the decision was made but a look at the MIIT website reveals that all sixteen Tesla variants sold in China are exempt from the tax. A post on Tesla’s WeChat account suggests that the exemption could lower the cost of buying a Tesla by up to 99,000 yuan ($13,957) for local buyers.

Also Read: Select Tesla Model 3 Test Drives Paused In China After First Tester Crashes

Tesla chief executive Elon Musk views China as a pivotally-important country to ensure its future growth. Tesla is in the midst of building a Gigafactory in Shanghai that will soon start producing the Model 3. Musk has also recently described China’s national leaders as “very thoughtful” and said the country is making “amazing” progress with sustainable energy.

“It is pretty clear Tesla is committed to China, with the investment in the Shanghai Gigafactory. Those relationships probably helped Tesla lobby for a successful exemption from the tax,” Roth Capital analyst Craig Irwin said. “Now we need to closely watch the build out of the Shanghai Gigafactory and Model 3 volume ramp in China.”

Word about Tesla being exempt from the 10 per cent purchase tax comes just a week after it was revealed that the electric automaker was preparing to jack up its Chinese prices after the yuan weakened significantly against the U.S. dollar in response to the ongoing trade war between the U.S. and China.