Tesla has stopped taking new orders for its Model S and Model X vehicles in China due to rising trade tensions between the United States and China. This decision comes as both countries have imposed hefty tariffs on each other’s goods, making imported US-made cars more expensive for Chinese buyers.
The news was reported by Reuters, highlighting that Tesla’s Model S and Model X are manufactured in the US and shipped to China. This makes them particularly vulnerable to the recent tariff increases. China recently raised its tariffs on US imports to 125 percent, while the US responded by raising duties on Chinese goods to 145 percent. These escalating tariffs have affected how much Chinese consumers pay for American cars compared to locally produced electric vehicles.
On Tesla’s Chinese website, potential buyers noticed that new orders for the Model S and Model X were no longer available. Although Tesla hasn’t officially stated the reason for this halt, the timing strongly suggests it is linked to the ongoing trade disputes.
While Tesla’s Shanghai factory focuses on producing the Model 3 and Model Y, which are more popular in China, the Model S and Model X are the company’s premium offerings with higher profit margins. Despite this, data from the China Auto Dealers Association shows that the Model S and Model X made up less than 0.5 percent of Tesla’s total deliveries in 2024, which numbered over 657,000 vehicles. This indicates that the suspension may not significantly impact Tesla’s overall sales in China.
Tesla also faces stiff competition from local manufacturers like BYD, which are gaining traction in the Chinese market. In the first quarter of this year, Tesla’s global deliveries, including those of the Model S and Model X, dropped by 25 percent. This decline has been attributed to a lack of new features for these models and some backlash against CEO Elon Musk’s political views.
Musk has been vocal about his criticism of tariffs, particularly targeting Trump economic adviser Peter Navarro. Their public feud has drawn attention as Musk has called Navarro names and questioned his qualifications. Meanwhile, Tesla’s stock has seen a significant drop, losing over 38 percent of its value this year, according to reports.
As the trade war continues to escalate, the future of Tesla’s premium models in China remains uncertain. The situation highlights the challenges faced by American companies in navigating international trade relations.