Tesla’s China-Built Cars Are Now Eligible For Local Subsidies

Tesla announced that their Chinese-built Model 3 vehicles are now eligible for state subsidies, which will further boost the efforts of the car maker to expand into the world’s biggest car market.

China’s industry ministry has previously said that the Model 3s produced at the new $2 billion factory in Shanghai were on a list with other recommended vehicles for incentives, Reuters reports.

Read Also: Tesla Wants To Be Building 1,000 Model 3s Weekly In China By The End Of 2019

The country’s authorities have qualified two variants of as eligible for a subsidy of as much as 25,000 yuan ($3,550). The starting price of a Tesla Model 3 in China is 355,800 yuan ($50,550).

Tesla is expecting to start deliveries of its locally-built Model 3s in China this January, as it gears up for the launch of mass production of its Shanghai-based Gigafactory. The annual capacity of its Chinese facility is expected to reach 250,000 vehicles per year, 150,000 of which will be Model 3s.

Producing its model locally means that Tesla will finally be more competitive there as it’ll avoid the high import tariffs imposed on US-built vehicles. Tesla was also granted a 10-percent tax exemption from the Chinese government, a move that’s expected to help them further lower the prices of their cars, while the Shanghai Gigafactory is the first one in the country that’s fully-owned by a foreign car maker.

China wants New Energy Vehicles (NEVs), which accounted for around 4.6 percent of the country’s overall sales in 2018, to reach a 25 percent market share by 2025.