• Tesla ceases orders for its Model S and Model X in China due to soaring import tariffs.
• China's tariffs on US cars have escalated to 125%, while US tariffs on Chinese products are now at 145%.
• Tesla will focus on promoting locally assembled models such as the Model 3 and Model Y.
• The decision impacts an already struggling luxury EV segment against more affordable local competitors.

Tesla, the electric vehicle pioneer founded by Elon Musk, has officially halted new orders for its Model S and Model X vehicles in China, as highlighted by multiple reports. This disruption aligns with escalating trade tensions between the United States and China, where tariffs on US-made products have significantly increased. As of now, India Times confirms that these imported models are unavailable through its Chinese website and WeChat platform.

The move follows China's recent decision to raise tariffs on US imports to 125% in response to US tariffs that rose to 145%. These additional costs have made the retail price of the Model S exceed 1.26 million yuan (approximately US$172,260), while the Model X has a starting price of 1.33 million yuan, outpricing many potential buyers. According to an analyst from the China Auto Dealers Association, in 2024, China imported only 1,553 Model X and 311 Model S vehicles, indicating limited demand for these high-priced models amid fierce competition from local brands like BYD and Xpeng, which offer more affordable alternatives.

As South China Morning Post noted, this strategy shift also aligns with Tesla's push to persuade customers to consider its locally assembled Model 3 and Model Y at its Shanghai Gigafactory. With competition intensifying, many buyers are reluctant to pay exorbitant prices driven by unfavorable tariffs.

While Tesla struggled with low sales of luxury models, a representative explained that deliveries encompassing the Model S and Model X have declined significantly, accounting for less than 0.5% of its total global deliveries of more than 657,000 units last year. As tensions in the ongoing trade conflict remain unresolved, both nations seem set on continuing their economic policies that jeopardize the automotive sector.

For further insights into this story, refer to Channel News Asia.