Tesla halts Model S and X orders in China due to tariff skirmish
Tesla Phases Out Model S and X in China Amid Trade Tensions and Market Shifts
Tesla has stopped taking new orders for its Model S and Model X vehicles in China, marking a significant shift in the company's strategy for these higher-end, lower-volume models. This decision is part of a broader plan to phase out these vehicles in certain international markets, following their discontinuation in Europe and several other regions.
In 2024, only 1,553 Model X and 311 Model S vehicles were imported into China, accounting for less than 0.5% of Tesla's over 657,000 deliveries in that country. Meanwhile, in Japan, only 1,864 Model S and X vehicles were imported, representing a minuscule portion of Tesla's deliveries in that nation.
The reasons behind this strategic move are multifaceted. Declining sales for the Model S and Model X, the launch of more competitively priced alternatives like the three-row Model Y in China, and Tesla’s focus on higher-volume mass-market vehicles such as the Model 3, Model Y, Cybertruck, and Semi are key factors.
The tariff hikes between the United States and China have made American-made vehicles like the Model S and Model X significantly more expensive for Chinese buyers. The same applies to Japanese buyers, as these tariff hikes have also impacted the cost of these vehicles in Japan.
However, it's important to note that locally built models, such as the Model 3 and Model Y produced at Giga Shanghai, are not affected by the cross-border tariff hikes in China. These models remain available for order in the Chinese market.
This strategic move by Tesla reflects the waning prominence of these original flagship vehicles amid its expanding lineup and ongoing market shifts. The company's focus is now on higher-volume models that scale better with demand and production.
The move is also believed to be a response to the rising trade tensions between the United States and China. This decision has been implemented not only on Tesla's Chinese website but also on its WeChat mini-program in China.
Tesla continues to offer the referral link for customers to get three months of Full Self-Driving (FSD) when buying a Tesla. The company is undoubtedly navigating a complex landscape, but its strategic decisions suggest a clear focus on its mass-market vehicles and the future of electric transportation.
[1] Source: Tesla's Q1 2025 earnings call and investor presentation.
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