Shanghai-built Tesla popular in China after new tax break

Tesla stores across Shanghai have been crowded with customers after a new tax break earlier this month, with most orders coming for the most affordable electric vehicle, the Model 3 sedan built at the city's Gigafactory.

The Model 3 orders spiked amid a cooling electric vehicle market in China after authorities gave dozens of electric vehicle makers a new tax break which lowers the cost of buying a Tesla in China to less than 300,000 yuan ($43,745).

"We have more customers these days looking for test drives and more information," said a salesperson in a Tesla store in Shanghai.

Tesla's Shanghai plant has manufactured nearly 1,000 vehicles available for sale and reached a production capacity of more than 3,000 vehicles per week since it rolled out its first 10 Model 3 sedans to Chinese customers on Jan 7, according to Tesla's latest financial report.

The price makes Tesla a competitive player in China's new energy vehicle (NEV) market, said Cui Dongshu, secretary general of the China Passenger Car Association, adding that Tesla's China production will have a "catfish effect" on the country's auto industry.

Tesla's sales in China will help push domestic carmakers to speed up technological upgrading, Cui added.

As a benchmark for NEVs, the Model 3 will help drive the innovation and upgrading of domestic suppliers, according to a report by Minsheng Securities.

China's NEV sales went up at the end of 2019 after almost a year of slowdown, reaching a 71.4-percent growth month on month in December, according to the China Association of Automobile Manufacturers.

The country's subsidy policy on NEVs will remain stable in 2020, with no big retreat, according to the Ministry of Industry and Information Technology earlier this month.

Tesla has started a big push for Chinese players and they will benefit from increased customer enthusiasm for smart, driverless cars, said Cui.