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Tesla unveils pricing strategy for China

By: | at 04:22 PM | Channel(s): International Trade  

U.S. battery carmaker Tesla Motors Inc has unveiled what it describes as a “competitive” pricing strategy for China aimed at kick-starting sales in the world’s biggest auto market, where demand for luxury cars has been booming.

The Palo Alto, California-based company said on Thursday that a version of the Tesla Model S, a sleek all-electric battery car which sells for $81,070 in the United States, would retail for 734,000 yuan ($121,300) in China after shipping costs and import duty and other taxes. The company was referring to a Model S with an 85 kilowatt-hour battery pack.

Global luxury automakers have been accused by Chinese state media outlets and others of reaping exorbitant profits selling imported cars often for twice or three times the price they charge in the United States and Europe.

That accusation followed investigations last year by China’s central government into how foreign companies in other sectors price their goods in the country.

“This pricing structure is something of a risk for Tesla,” Tesla said in a statement. “If we were to follow standard industry practice, we could get away with charging twice as much for the Model S in China as we do in the U.S.”

“We know that our competitors will try to convince Chinese consumers that our relatively lower price tag means the Model S is a lesser car, when the real reason their car costs more is that they make double the profit per car in China compared to the United States or Europe.” Tesla said.

Tesla began taking reservations for the Model S and its upcoming product called the Model X in China last August and has since opened a store in Beijing.

The company has said delivery was expected some time this year. (Reuters)