China exempts Tesla cars from 10% tax

BEIJING (Reuters) – China will exempt Tesla Inc. (TSLA.O) the tax on the purchase of electric vehicles, said Friday the Ministry of Industry and Information Technology (MIIT), a concession made in a context of trade tensions with the United States.

Tesla considers China to be one of its major growth markets, and the 10% sales tax exemption could reduce the cost of buying a Tesla up to 99,000 yuan (13,957.82 USD), according to an article posted on Tesla's social media account WeChat.

Sixteen variants – all Tesla models sold in the country – are listed in a document published by MIIT on its website, including models S, X and 3.

The decision to exclude cars from the tax was not motivated, but that comes from the fact that Tesla is expanding in China, with a new factory and tours of the CEO, Elon Musk .

The Tesla factory in Shanghai will be its first factory abroad. The company is preparing for a major sales promotion campaign in China by promoting race events, showroom parties with DJs and a range of Chinese Tesla stickers for chat applications.

Musk met with senior leaders, including Chinese Vice President Wang Qishan, and the Minister of Transport.

He also publicly praised China in the midst of tensions with the United States, thanking the Shanghai government and national governments for their support, calling the national leaders "very thoughtful" and describing China's "incredible" progress in the fields of sustainable energy, transport and space.

"This year, they made more orbital launches than the United States for the first time," tweeted Musk, who is also the general manager of rocket manufacturer SpaceX, in December. (Bit.ly/2ZBgVzR)

"It is clear that Tesla has committed to China with the investment in Shanghai's Gigafactory. These relationships have probably helped Tesla push for a successful tax holiday, "said Craig Irwin, an analyst at Roth Capital.

"We must now closely monitor the construction of Shanghai Gigafactory and Model 3 volume ramps in China," Irwin added.

Tesla did not respond to a request for comment from Reuters.

LMC Automotive estimates that 23,678 Tesla vehicles were sold in China in the first seven months of the year, nearly double the number of cars sold a year earlier.

The company's shares rose 1.5% to $ 225.01 in the early afternoon.