China will exempt 16 Tesla models from its 10% purchase tax on foreign vehicles, Reuters reported Friday, citing a statement from the the Ministry of Industry and Information Technology on its website. The move will help offset higher sticker prices for Tesla's vehicles in China that the company just announced, owing to tariffs being placed on the import of U.S. products into China.
The government's decision could lower the cost of buying a Tesla in China by up to $13,957, according to a post on Tesla's WeChat account, according to Reuters. No reason was given for the move to exempt Tesla from the purchase tax.
The news sent shares of Tesla up sharply higher in early trading on Friday, although gains moderated to a rise of 1.75% to $225.60 by late morning.
At the same time, Tesla announced on Thursday that it was raising the yuan-denominated price of several of its models in response to trade tensions that have weighed on the country's currency and have led to oscillating import tariffs on vehicles.
The price of a basic level imported Model 3 sedan went up more than 2% to 363,900 yuan ($50,900), according to Tesla's website.
Prices for basic level Model S sedans and Model X sport utility vehicles increased by a similar percentage, to 793,900 yuan and 809,900 yuan, respectively, according to the website.
Tesla is particularly impacted by the ongoing U.S.-China trade spat because it currently imports all of its cars from the U.S. -- which makes them entirely subject to increased tariffs.
China threatened last week to increase duties on U.S.-made cars to as high as 50% in retaliation for President Donald Trump's latest planned levies on Chinese goods, though both sides have scaled back their retaliatory rhetoric in recent days.
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