Tesla warns of problems selling cars in China due to tariffs

Tesla warns of problems selling cars in China due to tariffs
© Greg Nash

Tesla executives expressed concern over the sales of their electric cars after China slapped tariffs on them as part of Beijing’s trade war with Washington. 

“Tesla is now operating at a 55 percent to 60 percent cost disadvantage compared to the exact same car locally produced in China,” the company told Reuters

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Despite concerns surrounding the tariffs, Tesla had a very successful third fiscal quarter, surpassing delivery expectations, Reuters reported.

The company said it delivered 83,500 cars, above the previous Wall Street estimate of 80,000. 

“Yes, it sounds like the tariff comments could haircut some of their profit plans but the production ramp is very impressive and it should continue to move higher,” said analyst Chaim Siegel of Elazar Advisors.

Founder Elon Musk finalized a deal in July to build an auto plant in Shanghai, Tesla’s first factory outside the U.S. The company said it would seek to ramp up production in its new location to offset the gap between other foreign cars not facing such stringent tariffs. 

“With production stabilized, delivery and outbound vehicle logistics were our main challenges during Q3,” Tesla said. “We made many improvements to these processes throughout the quarter, and plan to make further improvements in Q4 so that we can scale successfully.”

The news also comes on the heels of the news that Musk would step down as chairman of the company following a settlement with the Securities and Exchange Commission (SEC) that resulted from his abandoned attempt to take Tesla private.