Tesla won exemption from a 10% purchase tax on the vehicles it sells in China, despite trade tensions between the country and the U.S.
The exemption, which typically is reserved for domestic makers of electric vehicles, affects all Tesla models sold in China, the nation’s industry ministry said Friday on its website.
China’s move comes amid heightened uncertainty as to where the trade war between the two countries is headed. A week ago, President Donald Trump ordered U.S. companies to immediately begin looking for alternatives to China, only to later suggest that tensions were cooling.
The exemption also sends a signal that the Chinese auto market -- the world’s biggest -- is opening to competition.
Tesla is building a new factory in China.
The sales-tax reprieve could partially offset retaliatory tariffs that may be put on Tesla and other U.S.-built cars later this year. China announced last week that it would increase tariffs on American autos by 25 percentage points to 40% on Dec. 15, in reaction to new levies the Trump administration plans on Chinese exports.
Tesla currently imports all of the cars it sells in China but plans to make the popular Model 3 at the new plant starting late this year. The company on Friday raised prices in China as trade tensions weigh on the country’s currency.