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Tesla’s China factory can’t arrive soon enough amid escalating US-China trade war

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Amidst the escalating trade war between the United States and China, American automakers such as Tesla have become the first victims of renewed, hefty tariffs on US-made products entering the country. In response to the 25% duties imposed by the United States government on $34 billion worth of Chinese imports last week, China has decided to strike back by placing a 40% levy on vehicles made in America.

The latest tariffs have forced Tesla to raise the prices of its Model S luxury sedan and its Model X SUV by 150,000 yuan ($22,647) to 250,000 yuan ($37,744). With the new duties in place, a fully-loaded Tesla Model S P100D now costs 1.47 million yuan ($221,937) in China, a far cry from the $147,000 price of the vehicle in the United States.

The latest tariffs come at a time when China implemented a reduction of its import duties for foreign-made vehicles from 20-25% to 15%. On the heels of the Chinese government’s announcement earlier this year, the response from Tesla’s customer base in the country was immediate. In Tesla’s Shanghai gallery alone, prospective buyers cleared out the store’s entire Model X 75D inventory in 24 hours after it was announced that the price of the vehicle would be reduced by $11,000 after the 15% tariffs were implemented.

While it is unfortunate to see the ongoing trade dispute between the United States and China once more affecting the prices of Tesla’s vehicles in the country, it is pertinent to note that even with hefty taxes placed on its electric cars, Tesla was fighting the good fight in China, and it was still thriving. The company, after all, established its presence and its reputation under an environment where its cars were priced far beyond its local competition.

Tesla’s story in China is one that showcases the learning curve that the California-based electric car and energy company continues to go through. Tesla began taking pre-orders for the Model S in China in August 2013. At that point in Tesla’s history, CEO Elon Musk was not even sure how much the production vehicle would cost. Deliveries were also expected to be eight months away. Anticipation among Chinese buyers, however, were high nonetheless, thanks to a combination of factors including Elon Musk’s rockstar status, as well as talks about the vehicle’s performance and supercar-worthy acceleration. Pre-orders for the Model S topped 5,000 that year.

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Unfortunately, Tesla was not able to support these first Model S owners properly. Due to miscalculations on its business strategy, Tesla ended up with a lot of disgruntled Chinese owners. One Model S buyer even made national news after he smashed the windshield of his own Tesla after the car arrived months later than expected. To top it off, the Supercharger network, widely considered as Tesla’s ace in the electric car industry today, was still in its infancy then, and China only had a small system centered around key cities. Things changed, however, on January 2015, when Elon Musk flew to China and met with President Xi Jinping. Musk also admitted to Tesla’s “earlier mistakes,” stating that he was nonetheless “very optimistic” about the company’s chances in the country. Tesla also attended the Shanghai Auto Show, sparking more interest in its electric vehicles.  

 

In the months that followed, Tesla expanded its Supercharger network, curbing the “range anxiety” of China’s electric car owners. Word-of-mouth about the company’s non-dealership sales model also started spreading. Tesla’s business in China experienced a massive boost when it introduced the Model X as well, considering the country’s obsession with SUVs. Government regulations, such as Shanghai’s electric-car friendly license plates gave even more benefits to Tesla. By the end of 2017, Tesla had already opened the largest Supercharger in the world in Shanghai. The company’s sales in the country in 2016 also helped boost its revenue enough to join the Fortune 500 list for the first time.

With Tesla’s history in mind, the renewed tariffs from the United States and China’s ongoing trade dispute could actually have little effect on Tesla’s overall operations in the country. The new duties will result in lost sales — that much is a given — but Tesla’s pedigree as a luxury automaker that makes cars that are the ultimate status symbols in China remain undaunted.

Tesla’s approval for its China site from the Central Committee of the Communist Party of China. [Credit: vincent13031925/Twitter]

Tesla, after all, has not really started its mass market push in China. The Model 3 and the Model Y, the company’s two vehicles that are targeted to dominate in the midrange segment, have not arrived in the country as of yet. With Elon Musk confirming during the Q1 2018 earnings call that the next Gigafactory will be in China, and that the facility will incorporate vehicle production, the solely-owned factory should allow Tesla to avoid the import taxes imposed on its upcoming, more budget-friendly vehicles — trade war or no trade war. 

Tesla’s China Gigafactory is expected to be the site where the electric car maker will manufacture the Model Y crossover SUV, as well as some of the Model 3. Both vehicles are targeted towards the mass-market, with Tesla estimating that the Model Y could see a demand of up to 1 million vehicles per year. With the Model Y and Model 3, Tesla could compete in China not only in the luxury segment, but on the more lucrative and more competitive midrange market as well. For now, however, Tesla’s efforts to establish its own factory in China seems to be going well, with the company being granted a final approval for its solely-owned electric car facility by the Central Committee of the Communist Party of China.

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Simon is an experienced automotive reporter with a passion for electric cars and clean energy. Fascinated by the world envisioned by Elon Musk, he hopes to make it to Mars (at least as a tourist) someday. For stories or tips--or even to just say a simple hello--send a message to his email, simon@teslarati.com or his handle on X, @ResidentSponge.

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Investor's Corner

Tesla Board member and Airbnb co-founder loads up on TSLA ahead of robotaxi launch

Tesla CEO Elon Musk gave a nod of appreciation for the Tesla Board member’s purchase.

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(Credit: Tesla)

Tesla Board member and Airbnb Co-Founder Joe Gebbia has loaded up on TSLA stock (NASDAQ:TSLA). The Board member’s purchase comes just over a month before Tesla is expected to launch an initial robotaxi service in Austin, Texas.

Tesla CEO Elon Musk gave a nod of appreciation for the Tesla Board member in a post on social media.

The TSLA Purchase

As could be seen in a Form 4 submitted to the United States Securities and Exchange Commission (SEC) on Monday, Gebbia purchased about $1.02 million worth of TSLA stock. This was comprised of 4,000 TSLA shares at an average price of $256.308 per share.

Interestingly enough, Gebbia’s purchase represents the first time an insider has purchased TSLA stock in about five years. CEO Elon Musk, in response to a post on social media platform X about the Tesla Board member’s TSLA purchase, gave a nod of appreciation for Gebbia. “Joe rocks,” Musk wrote in his post on X.

Gebbia has served on Tesla’s Board as an independent director since 2022, and he is also a known friend of Elon Musk. He even joined the Trump Administration’s Department of Government Efficiency (DOGE) to help the government optimize its processes.

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Just a Few Weeks Before Robotaxi

The timing of Gebbia’s TSLA stock purchase is quite interesting as the company is expected to launch a dedicated roboatxi service this June in Austin. A recent report from Insider, citing sources reportedly familiar with the matter, claimed that Tesla currently has 300 test operators driving robotaxis around Austin city streets. The publication’s sources also noted that Tesla has an internal deadline of June 1 for the robotaxi service’s rollout, but even a launch near the end of the month would be impressive.

During the Q1 2025 earnings call, Elon Musk explained that the robotaxi service that would be launched in June will feature autonomous rides in Model Y units. He also noted that the robotaxi service would see an expansion to other cities by the end of 2025. “The Teslas that will be fully autonomous in June in Austin are probably Model Ys. So, that is currently on track to be able to do paid rides fully autonomously in Austin in June and then to be in many other cities in the US by the end of this year,” Musk stated. 

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Tesla hints at ‘Model 2’ & next-gen EV designs

Tesla’s Q1 2025 update confirms new models this year, with production tied to existing factory lines. Could it be time for the Model 2 debut?

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(Credit: Tesla)

During its Q1 2025 earnings call, Tesla executives hinted at the much-rumored “Model 2” and other next-gen EV designs.

Tesla slightly addressed whether or not it will be pushing forward with the debut of new models later this year in its latest earnings call. The company’s product development executive, Lars Moravy, shared some details about Tesla’s design process and the upcoming affordable models.

“We’re still planning to release models this year. As with all launches, we’re working through, like, the last minute issues that pop up. We’re knocking them down one by one. At this point, I would say that the ramp might be a little slower than we had hoped initially…But there’s nothing that’s blocking us from starting production within the next, within the timeline laid out in the opening remarks.

“And I will say it’s important to emphasize that, as we’ve said all along, the full utilization of our factories is the primary goal for these new products. And so the flexibility of what we can do within the form factor and, you know, the design of it is really limited to what we can do on our existing lines rather than building new ones. But we’ve been targeting the low cost of ownership. Monthly payment is the biggest differentiator for our vehicles, and that’s why we’re focused on bringing these new models with the, you know, the lowest price, to the market, within the constraints I just highlighted.”

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In January, Tesla’s Chief Financial Officer Vaibhav Taneja teased several new product introductions for this year. There is at least one product that most Tesla supporters and investors are hoping to see: the company’s affordable vehicles, which have been dubbed by the EV community as the “Model 2” or “Model Q.”

Before Tesla’s Robotaxi event last year, many speculated that the company would also unveil its affordable next-gen vehicle. Gene Munster from Deepwater had expected Tesla to release a stripped-down version of the Model 3 as its affordable vehicle during the Robotaxi event. In the end, Tesla unveiled its Robotaxi vehicle and its Robovan design.

It’s been a while since the Robotaxi event, and Tesla has kept mum about its affordable vehicle. Considering its Q1 2025 performance, TSLA investors look forward to catalysts that could boost the stock.

The “Model 2” has been labeled a potential catalyst for Tesla. As such, TSLA investors and supporters have been itching for news about the new affordable vehicle. The main questions surrounding the “Model 2” revolve around its design and price. Based on Moravy’s statement, the “Model 2’s” design will heavily depend on Tesla’s current assembly lines and supply chain structures.

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Tesla regains Piper Sandler’s confidence with Robotaxi plans & Q1 Results

Piper Sandler says Tesla delivered the best-case scenario for bulls. $TSLA has catalysts ahead to silence the bears.

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tesla-model-y-delivery
(Credit: Tesla)

Tesla gained Piper Sandler analyst Alexander Potter’s confidence following its Q1 2025 earnings call. Piper Sandler reaffirmed its Overweight rating and $400 TSLA price target, signaling optimism for the company’s robotaxi and affordable vehicle launches expected this year. The firm’s stance reflects Tesla’s resilience amid market challenges.

Despite expectations of weak Q1 financials, Tesla’s stock edged up in after-hours trading, defying skepticism. Piper Sandler’s Alexander Potter noted that the results met the hopes of Tesla supporters, particularly as the company held firm on its timelines. Potter emphasized that anticipation for robotaxi details and new vehicle launches should keep critics at bay, supporting the $400 target.

“In our preview last week, we predicted that (at best) Q1 would be a non-event. With the stock trading up slightly in the after-hours session, it appears our best-case scenario has materialized. Considering generally weak Q1 financials, we think this is the best result that TSLA bulls could’ve reasonably hoped for.

“In our view, the most important Q1 takeaway is this: Tesla didn’t hedge expectations re: launching Robotaxis or lower-priced vehicles in 1H25. With <2 months until the end of June, investors can look forward to some interesting catalysts in the weeks ahead. In our view, this alone should be enough to keep the bears at bay, at least until we have a better idea re: the details of Tesla’s new products, as well as the scale/scope of the Robotaxi launch,” wrote Potter.

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Wedbush Securities’ Dan Ives, a longtime TSLA bull, echoed Potter’s optimism for Tesla. Ives raised his price target for Tesla stock from $315 to $350 with a BUY rating. His Tesla upgrade came after Elon Musk’s announcement during the Q1 earnings call that he would reduce his involvement with DOGE, signaling a sharper focus on Tesla.

Tesla’s steady Q1 performance and unwavering commitment to its 2025 roadmap, including the Robotaxi launch and lower-priced models, bolster investor confidence. Piper Sandler’s analysis underscores Tesla’s ability to navigate a competitive electric vehicle market while advancing its technological edge. The upcoming Robotaxi launch and affordable vehicle introductions are pivotal, with analysts expecting these initiatives to drive stock value through 2025.

As Tesla prepares for these milestones, its stock movement reflects market trust in Musk’s vision. With Piper Sandler and Wedbush reaffirming bullish outlooks, Tesla’s strategic moves will remain under close scrutiny, positioning the company to capitalize on its innovation pipeline in a dynamic industry landscape.

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