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Tesla expands locally made line-up, blunting trade war impact

FILE PHOTO: A Tesla logo is seen at a groundbreaking ceremony of Tesla Shanghai Gigafactory in Shanghai, China January 7, 2019. REUTERS/Aly Song

BEIJING (Reuters) – U.S. electric vehicle maker Tesla Inc (TSLA.O) said on Friday it has started China sales of two more Model 3 variants built at its Shanghai plant, meaning all Model 3 sedans sold in the country are now locally made and not subject to import tax.

The development comes at the tail end of a Sino-U.S. trade war characterised by tit-for-tat tariffs on goods and services as varied as metals and cars, which bumped up prices of U.S. made goods in China.

It also comes after Tesla suspended production at its San Francisco Bay Area plant due to the broader impact of the coronavirus, with plans to resume normal operation on May 4.

Tesla said it aims to start delivering Shanghai-made Long Range Model 3 cars from June this year, priced 339,050 yuan after subsidies.

The rear-wheel drive variant, with a driving range of over 600 kilometres before needing to be recharged, differs from the imported version which was all-wheel drive and priced 439,900 yuan.

The locally made Performance Model 3, for which deliveries are slated for the first quarter next year, will be priced 419,800 yuan, the California-based automaker said without specifying the price after subsidies. Imported Performance Model 3 vehicles were priced 509,900 yuan.

The move contrasts with a previous plan from Tesla’s billionaire chief executive, Elon Musk, under which the automaker would only make more affordable versions of the Model 3 sedan at its $2 billion Shanghai factory.

Tesla sold 10,160 vehicles in China in March, versus 3,900 in February, marking its highest-ever monthly sales in the world’s largest auto market, industry data showed.

Tesla also said it will cut the pay of global vice presidents in China by 30{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} and that of China-based director-level executives by 20{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}, to be consistent with operations in the United States. Salaries of other China-based staff are unchanged, it said.

Reporting by Yilei Sun and Se Young Lee; Editing by Muralikumar Anantharaman and Christopher Cushing

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