Why Tesla increased car prices in China

Tesla Inc. raised car prices in China, responding to trade tensions that weigh on the country’s currency and have led to oscillating import tariffs on vehicles.

The price of a basic level imported Model 3 sedan went up more than 2% to 363,900 yuan ($50,900), Tesla’s website showed on Friday. Prices for basic level Model S sedans and Model X sport utility vehicles increased by a similar percentage, to 793,900 yuan and 809,900 yuan, respectively.

Tesla is among automakers most affected by the US-China trade tensions, because it has no local production yet and therefore gets directly hit by any increases in tariffs.

China threatened last week to increase duties on US-made cars to as high as 50% in retaliation for President Donald Trump’s latest planned levies on Chinese goods.

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A Tesla spokesperson in China declined to elaborate on the price change, referring to information available on the company’s website.

Tesla is constructing a plant in China, an increasingly important market for the loss-making company as incentives for electric vehicles in the US wane. Tesla plans to start producing cars at the factory near Shanghai, Tesla’s first outside of the US, by the end of 2019. Chief executive officer Elon Musk is currently visiting the region, making an appearance at the World Artificial Intelligence Conference on Thursday.

A decline in the yuan reduces the value of any earnings that Tesla brings back from China and converts to dollars.

Earlier this week, the Chinese currency fell to an 11-year low against the dollar.