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China will exempt Tesla cars from purchase tax

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By Reuters
China will exempt Tesla cars from purchase tax
FILE PHOTO: A Tesla charging station is pictured during the media day for the Shanghai auto show in Shanghai, China April 16, 2019. REUTERS/Aly Song/File Photo   -   Copyright  Aly Song(Reuters)

BEIJING (Reuters) – China will exempt Tesla Inc’s <TSLA.O> electric vehicles (EV) from purchase tax, the Ministry of Industry and Information Technology (MIIT) said on its website.

China currently levies a 10% purchase tax on the sale of each vehicle. The move could reduce the cost of buying a Tesla car by up to 99,000 yuan ($13,957.82), according to a post on Tesla’s social media WeChat account.

Tesla’s pre-market share price jumped more than 5% after the announcement.

Sixteen variants – all the Tesla models sold in the country – are listed on the document issued by MIIT, including Model S, X and 3. No reason was given for the decision to exclude the cars from the tax.

The U.S. EV maker is building a plant in Shanghai, the firm’s first overseas factory.

It is due to start production by the end of the year and Tesla has said it should be able to build 3,000 Model 3 vehicles a week in its initial phases.

The plant is slated to have annual output capacity of 250,000 vehicles after production of the Model Y is added.

(Reporting by Yilei Sun, John Ruwitch and Beijing Monitoring Desk; editing by Jason Neely, Kirsten Donovan)