30% Of Tesla (TSLA) Model S Cost In China Is Duties And Taxes; Tesla Says It Won’t Gouge Chinese Consumers

 @angeloyoung_a.young@ibtimes.com
on January 23 2014 10:09 AM
Tesla China
Tesla's Chinese online ordering site is now live. Tesla Motors

UPDATE: Veronica Wu, vice president of Tesla in China told Reuters on Friday in Beijing that the company won the right in a Chinese court to use "Te Si La" -- the closest phonetic transliteration of "Tesla" -- that had been claimed by local businessman Zhan Baosheng.

Original story begins here: 

In Norway, Telsa Motors Inc. (NASDAQ:TSLA) enjoys a steep price advantage for its electric Model S luxury sedan thanks to lucrative green-incentive discounts offered to buyers of electric cars.

Now, as the Palo Alto, Calif.-based boutique automaker begins to make inroads into the Chinese luxury auto market it faces a different issue: steep duties and taxes that add nearly $37,000 to the cost of its vehicle.

The company announced Thursday that its Chinese online ordering site is up and running and that the cost of the Model S it is offering there is no different than it is in the U.S. or Europe if one excludes the hefty add-ons from the Chinese government as well as the cost of delivery.

Tesla said in a blog post Wednesday that it’s selling the Model S with the 85 kWh battery in China for $81,070, the same price the vehicle costs in the U.S. excluding the $7,500 federal tax credit. On top of the base price, Tesla is charging a $3,600 delivery fee. The final price tag, including the duties and VAT charge in China puts the price at 734,000 yuan (about $121,000).

This may sound like a lot, but it’s a bargain compared to the typical mark-ups of imported luxury cars in China, and Tesla made sure to point that out.

 “We know that our competitors will try to convince Chinese consumers that our relatively lower price tag means the Model S is a lesser car, when the real reason their car costs more is that they make double the profit per car in China compared to the United States or Europe.

An IBTimes review of luxury car listings in China last summer showed, for example, that a BMW X5 crossover was listing locally for $330,000 compared to just over $100,000 in the U.S., and that a BMW Mini Cooper can cost upward of $85,000 in China compared to about $52,000 in U.S.

Tesla Is Using “Te Si La” On Its Chinese Website

In related news, Tesla Motors has been fighting for its right to use certain trademarks in China where a local businessman by the name of Zhan Baosheng had beaten the automaker to the Chinese patent and trademark authority, registering the word "Tesla," the Chinese equivalent transliteration “Te Si La,” Tesla's “T-shaped” badge and Tesla's "Tesla Motors" logo including the company's distinctive logo font. Zhan claims he is a legitimate businessman trying to make an electric car named after Nicola Tesla, the inventor of the AC current, but his history and other trademark filings suggest he is squatting on the marks to force Tesla to buy the right to use them.

The company has remained mum about the ongoing trademark dispute in recent months, and as recently as last month Automotive News pointed out that Tesla is not using “Te Si La,” which is the closest phonetic transliteration of “Tesla.” But it does appear that the company is testing the waters in its right to use “Te Si La,” even if it's just a transliterated phrase rather than a registered trademark. Here you can see the company is using “Te Si La” in parentheses to translate the term “Tesla” that it displays in English letters. 

Te Si La The Chinese characters (circled) spell out "Te Si La," a phrase Tesla would like to trademark but has been hampered by a local who was the first to file the mark with the trademark authority in China.  Tesla, IBTimes

Also, the Chinese tesla website (tesla.cn), where Zhan had been using the trademarks, was not active as of Thursday afternoon. Whether this means Tesla has been successful in its battle against Zhan is not known publicly at this time. Neither the company nor the local Chinese trademark authority has released any updates on this ongoing dispute. 

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