Elon Musk Building Gigafactory in China to Escape Trade War

Tesla charging station.

Tesla charging station.

Elon Musk has recently begun construction on his Gigafactory in China. This could potentially allow him to escape from the tariffs that have been rising with President Trump’s trade war with China.

More Cars

Elon Musk and Shanghai officials first announced the Gigafactory in July [1]. Now, the building should be finished by the end of 2019. The factory will be producing versions of Tesla’s Model 3 and Model Y for China according to Musk.

Trade War

Lately, the tariffs between China and the United States have been steadily climbing. Last October Tesla stated that tariffs made by China to counter the U.S.’s tariffs “resulted in an import tariff rate of 40% on Tesla vehicles versus 15% for other imported cars in China.” [2]

To escape the high tariffs, Tesla has decided to just build the cars in whatever continent the customers are at, thus saving on tariff expenses.

In December China had temporarily halted its additional 25 percent tariff on vehicles made in the United States, bringing its tariff costs down to 15%. This “tariff truce” will end on March 1 unless the two countries make another trade agreement [3].


Notes:

  1. ^Elon Musk in China to Break Ground for First Tesla Factory Outside U.S.” Bloomberg.com, 7 Jan. 2019, www.bloomberg.com/news/articles/2019-01-07/elon-musk-in-china-to-break-ground-for-tesla-s-china-factory. (go back↩)
  2. ^“tsla-ex991_6.htm.” 2 Oct. 2018, www.sec.gov/Archives/edgar/data/1318605/000156459018023815/tsla-ex991_6.htm. (go back↩)
  3. ^Reid, David. “China says it will suspend additional tariff on US autos.” CNBC, 14 Dec. 2018, www.cnbc.com/2018/12/14/china-says-it-will-suspend-its-25-percent-additional-tariff-on-us-autos.html. (go back↩)

Leave a Reply

*