Shares in the company dropped over 5 percent in early trading after Chinese media reported Shanghai customs had suspended clearance for a batch of Tesla’s cars
Electric carmaker Tesla said on Tuesday that China’s customs authorities have accepted its plan to resolve problems with the clearance of its Model 3 sedans that centred around misprinting of labels.
Shares in the company dropped over 5 percent in early trading after Chinese media reported Shanghai customs had suspended clearance for a batch of Tesla’s cars. The shares were last down 1.3 percent at $281.73.
We have already reached a resolution with Chinese customs, and we are working closely with them to resume clearance procedures on these vehicles, a Tesla spokesperson said in a statement. Sales of Model 3 in the country are not impacted, and we continue to deliver Model 3 vehicles that have already been processed.
Making inroads into China, the world’s largest electric vehicle market, is crucial for the Tesla as it seeks to offset softening demand in the US and convince investors of its ability to become consistently profitable.
Selling into China has clear hurdles and this is a reminder of the pitfalls when betting on growth in the region, Wedbush Securities analyst Daniel Ives said.
Tesla’s Musk has played up the support it is getting from Chinese authorities as the company invests in the country’s first wholly foreign-owned car plant in Shanghai, due to come online later this year.
Until then, Tesla has to import U.S.-made cars which involve substantial customs duties, putting it at a disadvantage against locally-made, government-subsidized electric vehicles from rivals such as Nio Inc, Byton and XPeng Motors.
Tesla’s Shanghai factory plans to start making Model 3s at the end of this year and eventually produce cars at a rate of 10,000 per week.
The carmaker has cut prices in China several times in the last few months to make its cars “more affordable” and revive sales hit by Sino-U.S. trade tensions. Tesla last week launched a $35,000 version of its Model 3 sedan to cut costs and support its drive to generate profit and said its global sales would now be online-only.