Tesla Inc (NASDAQ:TSLA) is pleased upon receiving information that it has been exempted from a 10% purchase tax. This subsidy is specifically in line with the company’s Model 3 sedans that are being manufactured in China. Elon Musk is quite excited by the boon saying that their customers will be on the gaining end.
About the exemption
But anyone following closely on the company’s moves and hasn’t been hit by surprise. That is because it is something that had been seen coming sometime back. For instance, the company’s imported vehicles in August enjoyed a subsidy.
Tesla outlines that the coming few weeks or months will be busy ones for it. That is considering that it wants to thrive both locally and internationally. Taking up market leadership in China is not easy to do, and it will have to ramp up its business operations.
The company has revealed that it is considering using local components in its manufacturing activities. It believes that the move will help it cut down on costs. It will mean more profits for the business guru as well as make the sale of products at more affordable.
Tesla’s business operations in China
Tesla is set to contend for the customers with several local contenders such as Xpeng Motors and NIO Inc. Asides from these, it is also getting ready to stage stronger competition to other global manufacturers. Topping the list of leaders are Daimler AG and BMW AG.
It is a great opportunity for the company’s China-built models. The business guru observes the recent qualification for a subsidy as a great start to its expanded business operations in the country. Reports indicate that averagely there will be a subsidy of about 25,000 yuan for each vehicle. This figure translates to $3,600 in the standard currency.
Tesla has already disclosed its plan to bring down the price of the sedans that will be assembled locally. It will be reducing the price by almost 20% or even by a greater margin. This effect may start being felt in the coming year.
The company’s Model 3 is expected to compete effectively with local contenders’ vehicles. Most of them are turning to the production of electric cars.