Tesla said to be considering raising prices in China

Tesla superchargers in a parking lot in Suzhou, China, where the car maker is mulling price rises amid yuan-related uncertainty. (Reuters)
Updated 07 August 2019

Tesla said to be considering raising prices in China

  • Company may raise prices starting in September

BEIJING: US electric vehicle maker Tesla Inc is considering lifting its prices in China from September amid yuan-related uncertainty, two people familiar with the matter said.
The people declined to be named as the plan has not been made public. They did not offer detail on the price change.
China allowed the yuan to weaken past the 7-per-dollar level on Monday for the first time in more than a decade, after which the US government labelled China a currency manipulator, raising the stakes in the trade dispute between the two countries.
China firmly opposes the currency manipulator label saying it has not used and will not use the yuan to cope with the US trade frictions.
The sharp drop in the yuan comes days after US President Donald Trump stunned financial markets by vowing to impose 10% tariffs on the remaining $300 billion of Chinese imports from Sept. 1, abruptly breaking a brief ceasefire in a trade war that has disrupted global supply chains and slowed growth.
Tesla currently imports all the cars it sells in China, but it is in the process of building a factory in Shanghai that will manufacture Model 3 cars in the initial phase and help it minimize the impact of the trade war and tariffs.
If enacted, this would be the first case of a planned price adjustment by an importer since the yuan fell this week and points to the growing pressure that importers are facing.
Tesla broke ground on the Shanghai factory in January and its Chief Executive Officer Elon Musk has said the firm aims to finish initial construction this summer and start production of the Model 3 towards the end of the year.
Deliveries of all models in the second quarter this year rose 51% from the first quarter to 95,200 vehicles, including 77,550 Model 3s, 17,650 Model S and X.
Last month, Tesla globally dropped the standard-range variants of its Model X and Model S from its product lineup and adjusted prices across its range.
In China, the world's largest electric vehicle market, the trade frictions between China and the US has caused Tesla to adjust its multiple times over the past year because of the tariff changes.


Despite agreement, China purchase of US agriculture lags

Updated 10 August 2020

Despite agreement, China purchase of US agriculture lags

  • The two sides are set to meet on Saturday to discuss the deal, American media says

NEW YORK: Seven months after the United States and China signed a preliminary agreement to temper their trade war, Beijing’s purchases of US agricultural goods have yet to reach the deal’s target.

As President Donald Trump readies for a tough reelection battle in November, US media reported the two sides are set to meet beginning August 15 to discuss the deal, which calls for China to sharply increase buying American goods and services this year and next.

But according to data compiled by the Peterson Institute for International Economics (PIIE), Chinese agricultural purchases at the end of June were far from where they should be at this point in the year.

They had reached only 39 percent of their semiannual target, according to US figures, or 48 percent, based on Chinese figures.

“If we get back to what the level of trade was in 2017, we’ll be lucky,” said Chad Bown, a PIIE senior fellow who authored the study, referring to the year before the trade war began.

Under the deal’s terms, China agreed to increase agricultural imports $32 billion over the next 2 years from 2017 levels.

Chinese orders for corn and soybeans have increased since mid-July, with Beijing buying just over 3 million tons of American oilseeds between July 14 and Aug. 7, according to US Department of Agriculture data.

At the end of July, the United States reported the largest-ever daily order by China for its corn, of 1.9 million tons.

The announcements were a relief to US farmers, who are expecting a bumper crop this year and need to find buyers to take it.

They also came at a time of high political tension between the two countries, after the Trump administration authorized sanctions against several Hong Kong leaders over the rights crackdown in the city, and restrictions on Chinese apps WeChat and TikTok.

The Chinese “realize we’re not being the best of buddies right now, but they need the products and they’re gonna take as much as they need,” said Jack Scoville, agricultural market analyst for Price Futures Group.

It’s possible that Beijing will change its orders from buying this year’s harvest to next year’s.

But analysts warn that any orders could be called off before the ships carrying them leave port.

Brazil and Argentina, two of the world’s largest soybean and corn producers, are starting their harvests next spring, said Brian Hoops, president of the brokerage firm Midwest Market Solutions.

China “could cancel all these purchases they made in July and buy at much cheaper prices if that’s available to them,” Hoops said.

The trade deal dubbed “phase one” and signed in January has managed to survive both the tensions and the sharp global economic downturn caused by the coronavirus pandemic, which has badly hit international trade.

US Trade Representative Robert Lighthizer in June said China would follow through on its commitments, while Washington would also pursue a “phase two” trade deal that “will focus on issues of overcapacity, subsidization, disciplines on China’s state-owned enterprises, and cyber theft.”

Bown said any success in getting China to buy not just farm but also energy and manufactured goods, would aid Trump in his reelection campaign.