Tesla’s new Model X will cost you an arm and a leg in China

Fans of affordable electric vehicles, avert your eyes. Tesla has announced its mainland China pricing for high-end models of its upcoming SUV, the Model X, and the numbers are not pretty. The 90D model, which will cost around US$100,000 in most other markets, will run Chinese consumers a whopping US$146,000. Chinese Tesla fans who want the fancy P90D Signature Red limited edition model can expect to pay almost US$225,000 (the Signature P90D reportedly costs US$132,000 in the US).

This news shouldn’t come as a huge surprise. Prices for other Tesla models in China, like the Model S 70D it announced last year, feature similar markups.

It’s not clear exactly who Tesla fans should blame for the consistently high prices. China does charge high import duties on luxury cars, reportedly around 25 percent. But Chinese state media has accused foreign automakers of price-gouging in China, and a 25 percent tariff doesn’t explain how the P90D Signature model seems to double in price somewhere between Tesla’s US home and Beijing.

On the other hand, Tesla claims that it charges the same prices for all of its cars after accounting for transportation costs and import duties. And Tesla’s prices are pretty reasonable compared to other imported luxury cars. Tesla’s China markup for the Model X 90D is 53.7 percent. That’s nothing compared to the whopping 188.4 percent markup Chinese consumers pay to buy the BMW M5, for example, which costs under US$100,000 in the US and nearly US$300,000 in China. The China markup on a luxury SUV, the Porsche Cayenne Turbo, is even worse (194 percent).

Even with the high costs, the Model X could do well in China. A fan tally (which almost certainly doesn’t account for all reservations) suggests the company has over 2,600 Model X units reserved in China already. Moreover, the car features an air-filtering biodefense system that could be a boon to urban Chinese drivers who want to ensure they’re not breathing in Beijing’s toxic haze.

Lower costs coming?

It will be interesting to see how Tesla prices its lower-cost Model 3 when that hits the market next year (or later). Currently, its offerings are all luxury-tier, and although the China prices are inflated, China’s luxury car consumers can generally afford to pay them. China has more than a million millionaires, after all. But the Model 3 is intended to be accessible to the middle class, at least in Western markets. Will Tesla price it aggressively to go after that market in China too, or will it become a low-end luxury offering thanks to China price inflation?