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Tesla: China could be biggest market for electric car

Luxury electric car maker Tesla sees China as potentially the company’s biggest market for its vehicles, despite a hefty $121,000 sticker price. But that six-figure cost might make the vehicles more attractive to Chinese buyers, according to Tesla’s CEO.

$121,000 sounds like a lot of money for the Tesla Model S, considering you can pick up the 85 kWh car in the U.S. from $80,000 or so, before incentives.

And it is a lot of money, but in China, where that price tag will be attached, Tesla promises it represents good value for buyers.

CEO Elon Musk is positive too–expensive it may be, but in comparison to rivals it’s very reasonably priced–and China could wind up being Tesla’s biggest market.

The $50,000 Chinese premium is all down to the way the country’s tax system works.

The car itself starts off at around $80,000, just like any 85 kWh Tesla Model S. Since Tesla builds its cars in the U.S, it has to add $3,600 in shipping costs to get cars over to China.

It’s taxes that represent the real cost increase. Customs duties and taxes amount to $19,000, and the country’s sales tax–VAT, or “value added tax”–adds another $17,700. At current exchange rates, that’s 734,000 Chinese Yuan, equivalent to $121,000.
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