BENGALURU (July 9): Tesla Inc has raised prices on its Model X and S cars by over US$20,000 in China, automotive news website Electrek reported on Monday, making it one of the first US carmakers to hike prices in the wake of rising trade tensions.
China slapped retaliatory tariffs on US car imports in response to President Donald Trump's move to impose tariffs on US$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 had planned to build a factory in the country.
The company in May slashed up to US$14,000 off its Model X in China after Beijing announced major tariff cuts for imported automobiles.
China planned to reduce import tariffs to 15% from 25% for most vehicles from July 1.
China contributed about 17% to Tesla's total revenue in 2017 and the electric car maker ships an estimated 15,000 cars a year to the country.
"Raising the 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 else where."
The prices of the Model S and Model X were increased over the weekend by 150,000 yuan to 250,000 yuan (US$22,600 to US$37,600) depending on the version, Electrek reported.
"I wouldn't wonder if Tesla is going to hike the prices in general, because the money is getting shorter and shorter. Cutting 9% 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.
Tesla did not immediately respond to a request for comment by Reuters.
There will be other automakers who are going to raise prices, Levy said.
Ford Motor Co said on Thursday it would not hike prices on its imported cars for now, including those on higher-margin luxury Lincoln models, crimping its profit margins on cars imported to China.