(Bloomberg) -- Tesla Inc. needs to brace for another setback after China included electric cars among American products that it would hit with additional tariffs in a counter-punch to the U.S.
Other American auto imports also made the list of products China is threatening including SUVs, which could even impact BMW AG and Daimler AG. But Tesla is at particular risk. The Elon Musk-led carmaker relies on U.S.-built vehicles for all its Chinese sales, whereas U.S. carmakers General Motors Co. and Ford Motor Co. manufacture in China and import few vehicles into the world's biggest market.
China's announcement adds to a tough past few weeks for its Musk and Tesla investors, with a flurry of negative news dragging on the company's shares. China is Tesla's biggest single market after the U.S., and an additional tariff would hand local electric-vehicle manufacturers even more of a pricing edge.
“The jump in tax levy hurts Tesla the most as it had not yet started local production in China,” said Cui Dongshu, the secretary general of China's Passenger Car Association. “For GM and Ford, they can always make up with China-produced ones.”
A Tesla spokeswoman based in Beijing wasn't immediately available to comment. Tesla shares fell 5.2 percent to $253.50 as of 8:35 a.m. in New York, before the start of regular trading. The stock has dropped 14 percent this year through Tuesday's close.
No Deal
Tesla has been working with Shanghai's government since last year to explore assembling cars in China, but has yet to clinch a deal. An agreement hasn't been finalized because the two sides disagree on the ownership structure for a proposed factory, people with direct knowledge of the situation said in February.
The U.S. carmaker is already hindered by China's current 25 percent import tax that catapults the sticker prices of Model S sedans and Model X crossovers beyond the means of most consumers. An additional duty would further relegate Tesla into a niche marque only afforded by the most wealthy.
Hefty import duties have contributed to other carmakers' decisions to produce in China under joint-venture agreements. Volkswagen AG makes most of the vehicles it sells in the country at local plants, and about two-thirds of BMW and Daimler sales come from domestic factories.
BMW, Daimler Impact
German carmakers exported about 151,000 cars from plants like BMW's in Spartanburg, South Carolina, and Daimler's Tuscaloosa site in Alabama to China last year, the carmaker lobby group VDA said in an email. Of that, BMW accounted for 100,000 sport utility vehicles, the company said. The ratio will change from about mid-year, when the luxury carmaker will start producing the X3 SUV in China.
Tesla sold 14,883 vehicles in China last year, accounting for just 3 percent of the nation's battery-powered electric-vehicle sales and placing it as the No. 10 brand in that segment. China accounted for 17 percent of Tesla's revenue for 2017, according to data compiled by Bloomberg.
In the first two months of this year, 36,000 vehicles were imported from U.S., including Teslas, Lincolns and Mustangs, according to China's PCA.
In February, China imported 2,323 vehicles with electric motors from the U.S., and 2,160 of those were Teslas.
To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.net.
To contact the editors responsible for this story: Ville Heiskanen at vheiskanen@bloomberg.net, Craig Trudell at ctrudell1@bloomberg.net, Tom Lavell
©2018 Bloomberg L.P.
With assistance from Tian Ying
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
