China exempts automaker Tesla from the tax on the purchase. What does it mean?

HONG KONG (CNN) – Tesla has benefited from a 10% tax exemption on purchase, which will reduce the price that customers will have to pay for a 3, S or X model, announced Chinese authorities.

The list of exemptions, established by the Ministry of Industry, Information Technology and by the Government Tax Administration, included 34 car manufacturers. The list mainly applies to vehicles manufactured by joint ventures between Chinese and foreign companies, such as Daimler and Toyota, making Tesla the only foreign manufacturer to benefit from the only exemption.

The exemptions are designed to help automakers using new forms of energy, such as electric vehicles. Apply to cars made in China, as well as to imported cars.

The tax exemption was announced the same day the company's founder, Elon Musk, met with Chinese Transport Minister Li Xiaopeng, according to a statement issued by the Ministry of Transportation on social media.

The agreement is important in part because of the intensification of the trade war between the United States and China. Beijing announced last month its intention to restore tariffs of 25% on US imports of automobiles and auto parts by 5% in December.

As Tesla plans to install a major plant in China, the company is still counting on its main plant in Fremont, California, to produce cars for the world's largest automotive market. The company had already reduced its prices to absorb the cost of Chinese tariffs.

The automaker has also set ambitious plans for China: a new manufacturing plant in Shanghai is under construction since the beginning of the year, the company's first out of the United States. It is also the first time that China allows a foreign builder to open a factory in the country without a local partner.

Musk told analysts in July that he was expecting a long-term demand for Model 3, the company's best-selling model, of about 5,000 cars a week.

Musk also said at a conference in Shanghai with Ali Baba's president, Jack Ma, that he had gone to the city to visit the factory and was impressed by the progress he had seen so far. The speed in my life before, I've seen some crazy things in my life … I really think China is the future. "