Tesla Begins Model 3 Deliveries in China

Tesla Inc. began delivering its first boatload of Model 3 electric sedans to customers in China earlier today.

The company rushed the shipment to beat a possible hike in import tariffs on March 1 if China and the U.S. failed to reach a trade agreement by then.

The White House has threatened to raise tariffs to as much as 25% on $200 billion worth of if China goods if the two countries fail to reach a trade agreement by the end of this month. China countered with a 40% tax on cars from the U.S. But the two countries agreed in December to the escalations pending further trade talks.

President Donald Trump signaled earlier this week he may delay the March 1 deadline for greater U.S. levies for as long as 90 days because of encouraging progress on the negotiations.

Telsa’s cheapest Model 3 in China retails for more than $64,000. The company says its sales revenue from China shrank 13% to $1.8 billion last year on sales of the company’s considerably pricier Model S electric sport sedan and Model Y electric crossover.

Tesla has broken ground on an assembly plant in Shanghai whose output would enable it to avoid tariffs regardless of the status of trade friction between China and the U.S. The company has indicated it may launch temporary production at the facility—perhaps by setting up a giant tent as it did last summer to bolster Model 3 output in the U.S.—late this year.