Tesla's Hong Kong Sales Gutted by Tax Switch
By Tim Higgins and Charles Rollet Published July 09, two thousand seventeen Features
Tesla Inc.’s sales in Hong Kong plummeted after authorities slashed a tax break for electrified vehicles on April 1, demonstrating how sensitive the company’s spectacle can be to government incentive programs.
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Official data from Hong Kong’s Transportation Department, analyzed by The Wall Street Journal, display that no freshly purchased Tesla Model S sedans or Model X sport-utility vehicles were registered in April in the Chinese territory, and only five privately wielded electrified vehicles were registered in May.
The collapse followed a surge just before the tax switch, which had been announced in February, with fresh registrations of almost Trio,700 Tesla vehicles in the very first quarter — including Two,939 in March alone — compared with 1,506 vehicles in the entire 2nd half of 2016.
The sway was significant for Tesla, which reported that its vehicle deliveries globally topped 25,000 in the very first three months of the year, the auto maker’s best sales quarter ever, but fell to just over 22,000 in the 2nd quarter.
The more latest total put Tesla within its first-half target range but below analysts’ expectations for the quarter, and fueled concerns among analysts and investors that request for Tesla’s current two models is weakening ahead of the launch of the Model Trio, a $35,000 sedan that starts production this month.
The concerns helped thrust Tesla’s share price down over the past week, after a surge earlier this year that shoved its value above that of Ford Motor Co. and General Motors Co.
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"Tesla welcomes government policies that support our mission and make it lighter for more people to buy electrified vehicles, however, our business does not rely on it," Tesla said in a statement. The company said its sales revenue in China, where it faces large tariffs, has risen without government incentives. "At the end of the day, when people love something, they buy it," it said.
Buyers of Teslas and other electrified vehicles in many markets benefit from government incentives. Tesla notes on its website that U.S. purchasers are eligible for a $7,500 federal income tax credit, plus extra incentives in some states.
The company also sells state zero-emissions vehicle credits to auto makers that don’t reach government fuel-efficiency standards.
Tesla warns investors in securities filings that such incentives can switch and says that "could have some influence on request for our products and services." Last year in Denmark, an incentive program expired and was substituted with a less generous one.
The incentive policies can be controversial. During the Obama administration, Tesla received loans to encourage electric-vehicle development. However it ultimately paid them back, critics have cited that assistance in arguing Tesla unfairly benefited from U.S. government help.
Tesla Chief Executive Elon Musk has rejected such contentions, telling during an analyst call in May the notion that his company has survived because of government subsidies and tax credits "drives me crazy." Tesla says on balance, industry incentive structures still benefit traditional, combustion-engine vehicles.
Hong Kong, tho’ relatively puny, is a significant outpost of luxury car buyers and trend setters. Its government had long waived its vehicle registration tax for freshly purchased electrical automobiles, adding to the appeal of Tesla’s cars.
Citing enhanced congestion of privately wielded vehicles on its streets, the government said in February that it would be switching the policy so the tax would be waived only on the very first 97,500 Hong Kong dollars (about US$12,500) of an electrical car’s purchase price for individuals. After the switch came into effect on April 1, the cost of a basic Tesla Model S in Hong Kong effectively rose to around US$130,000 from less than US$75,000.
The diminished waiver, which doesn’t apply to sales of commercial electrical vehicles such as buses, is effective through March of next year. The government says it will review the policy before then.
The Hong Kong registrations data don’t demonstrate actual sales figures but are a close proxy because fresh cars in Hong Kong must be registered to be driven. The May figure, which hasn’t been published, was provided to district council members and viewed by the Journal.
The end of the tax exemption "has truly put the brakes on electric-vehicle adoption in Hong Kong," said Mark Webb-Johnson, a founder of Charged Hong Kong, a group that promotes electrical vehicles.
Tesla doesn’t break out vehicle sales by country or region and declined to discuss specifics in Hong Kong. But it acknowledged in a statement a slowdown, calling it "expected" following the tax switch and a "short-term" challenge. The company said it resumes to sell vehicles in Hong Kong each quarter and expects "the Hong Kong market will proceed to be very strong over the long-term because it’s clear that the people of Hong Kong love our cars."
The reversal in Hong Kong comes as Tesla is planning to expand in mainland China, the world’s largest fresh car market. Last month, Tesla said it was exploring with the Shanghai city government the possibility of opening a manufacturing facility in China. China charges a 25% duty on all imported cars.
Dave Sullivan, an analyst for the consulting hard AutoPacific Inc., said the Hong Kong decline could foreshadow challenges for Tesla as a luxury brand in China.
"Hong Kong is the fashionable China," he said. "It’s not exactly painting a glowing picture for the future of Tesla in China."
Tesla s Hong Kong Sales Gutted by Tax Switch, Fox Business
Tesla's Hong Kong Sales Gutted by Tax Switch
By Tim Higgins and Charles Rollet Published July 09, two thousand seventeen Features
Tesla Inc.’s sales in Hong Kong plummeted after authorities slashed a tax break for electrical vehicles on April 1, demonstrating how sensitive the company’s spectacle can be to government incentive programs.
Proceed Reading Below
Official data from Hong Kong’s Transportation Department, analyzed by The Wall Street Journal, showcase that no freshly purchased Tesla Model S sedans or Model X sport-utility vehicles were registered in April in the Chinese territory, and only five privately wielded electrified vehicles were registered in May.
The collapse followed a surge just before the tax switch, which had been announced in February, with fresh registrations of almost Trio,700 Tesla vehicles in the very first quarter — including Two,939 in March alone — compared with 1,506 vehicles in the entire 2nd half of 2016.
The sway was significant for Tesla, which reported that its vehicle deliveries globally topped 25,000 in the very first three months of the year, the auto maker’s best sales quarter ever, but fell to just over 22,000 in the 2nd quarter.
The more latest total put Tesla within its first-half target range but below analysts’ expectations for the quarter, and fueled concerns among analysts and investors that request for Tesla’s current two models is weakening ahead of the launch of the Model Three, a $35,000 sedan that embarks production this month.
The concerns helped shove Tesla’s share price down over the past week, after a surge earlier this year that shoved its value above that of Ford Motor Co. and General Motors Co.
Proceed Reading Below
"Tesla welcomes government policies that support our mission and make it lighter for more people to buy electrical vehicles, however, our business does not rely on it," Tesla said in a statement. The company said its sales revenue in China, where it faces large tariffs, has risen without government incentives. "At the end of the day, when people love something, they buy it," it said.
Buyers of Teslas and other electrical vehicles in many markets benefit from government incentives. Tesla notes on its website that U.S. purchasers are eligible for a $7,500 federal income tax credit, plus extra incentives in some states.
The company also sells state zero-emissions vehicle credits to auto makers that don’t reach government fuel-efficiency standards.
Tesla warns investors in securities filings that such incentives can switch and says that "could have some influence on request for our products and services." Last year in Denmark, an incentive program expired and was substituted with a less generous one.
The incentive policies can be controversial. During the Obama administration, Tesla received loans to encourage electric-vehicle development. However it ultimately paid them back, critics have cited that assistance in arguing Tesla unfairly benefited from U.S. government help.
Tesla Chief Executive Elon Musk has rejected such contentions, telling during an analyst call in May the notion that his company has survived because of government subsidies and tax credits "drives me crazy." Tesla says on balance, industry incentive structures still benefit traditional, combustion-engine vehicles.
Hong Kong, tho’ relatively petite, is a significant outpost of luxury car buyers and trend setters. Its government had long waived its vehicle registration tax for freshly purchased electrical automobiles, adding to the attraction of Tesla’s cars.
Citing enhanced congestion of privately wielded vehicles on its streets, the government said in February that it would be switching the policy so the tax would be waived only on the very first 97,500 Hong Kong dollars (about US$12,500) of an electrical car’s purchase price for individuals. After the switch came into effect on April 1, the cost of a basic Tesla Model S in Hong Kong effectively rose to around US$130,000 from less than US$75,000.
The diminished waiver, which doesn’t apply to sales of commercial electrified vehicles such as buses, is effective through March of next year. The government says it will review the policy before then.
The Hong Kong registrations data don’t showcase actual sales figures but are a close proxy because fresh cars in Hong Kong must be registered to be driven. The May figure, which hasn’t been published, was provided to district council members and viewed by the Journal.
The end of the tax exemption "has indeed put the brakes on electric-vehicle adoption in Hong Kong," said Mark Webb-Johnson, a founder of Charged Hong Kong, a group that promotes electrical vehicles.
Tesla doesn’t break out vehicle sales by country or region and declined to discuss specifics in Hong Kong. But it acknowledged in a statement a slowdown, calling it "expected" following the tax switch and a "short-term" challenge. The company said it resumes to sell vehicles in Hong Kong each quarter and expects "the Hong Kong market will proceed to be very strong over the long-term because it’s clear that the people of Hong Kong love our cars."
The reversal in Hong Kong comes as Tesla is planning to expand in mainland China, the world’s largest fresh car market. Last month, Tesla said it was exploring with the Shanghai city government the possibility of opening a manufacturing facility in China. China charges a 25% duty on all imported cars.
Dave Sullivan, an analyst for the consulting stiff AutoPacific Inc., said the Hong Kong decline could foreshadow challenges for Tesla as a luxury brand in China.
"Hong Kong is the fashionable China," he said. "It’s not exactly painting a glowing picture for the future of Tesla in China."
Tesla s Hong Kong Sales Gutted by Tax Switch, Fox Business
Tesla's Hong Kong Sales Gutted by Tax Switch
By Tim Higgins and Charles Rollet Published July 09, two thousand seventeen Features
Tesla Inc.’s sales in Hong Kong plummeted after authorities slashed a tax break for electrified vehicles on April 1, demonstrating how sensitive the company’s spectacle can be to government incentive programs.
Proceed Reading Below
Official data from Hong Kong’s Transportation Department, analyzed by The Wall Street Journal, showcase that no freshly purchased Tesla Model S sedans or Model X sport-utility vehicles were registered in April in the Chinese territory, and only five privately possessed electrical vehicles were registered in May.
The collapse followed a surge just before the tax switch, which had been announced in February, with fresh registrations of almost Three,700 Tesla vehicles in the very first quarter — including Two,939 in March alone — compared with 1,506 vehicles in the entire 2nd half of 2016.
The sway was significant for Tesla, which reported that its vehicle deliveries globally topped 25,000 in the very first three months of the year, the auto maker’s best sales quarter ever, but fell to just over 22,000 in the 2nd quarter.
The more latest total put Tesla within its first-half target range but below analysts’ expectations for the quarter, and fueled concerns among analysts and investors that request for Tesla’s current two models is weakening ahead of the launch of the Model Three, a $35,000 sedan that embarks production this month.
The concerns helped shove Tesla’s share price down over the past week, after a surge earlier this year that shoved its value above that of Ford Motor Co. and General Motors Co.
Proceed Reading Below
"Tesla welcomes government policies that support our mission and make it lighter for more people to buy electrified vehicles, however, our business does not rely on it," Tesla said in a statement. The company said its sales revenue in China, where it faces large tariffs, has risen without government incentives. "At the end of the day, when people love something, they buy it," it said.
Buyers of Teslas and other electrical vehicles in many markets benefit from government incentives. Tesla notes on its website that U.S. purchasers are eligible for a $7,500 federal income tax credit, plus extra incentives in some states.
The company also sells state zero-emissions vehicle credits to auto makers that don’t reach government fuel-efficiency standards.
Tesla warns investors in securities filings that such incentives can switch and says that "could have some influence on request for our products and services." Last year in Denmark, an incentive program expired and was substituted with a less generous one.
The incentive policies can be controversial. During the Obama administration, Tesla received loans to encourage electric-vehicle development. However it ultimately paid them back, critics have cited that assistance in arguing Tesla unfairly benefited from U.S. government help.
Tesla Chief Executive Elon Musk has rejected such contentions, telling during an analyst call in May the notion that his company has survived because of government subsidies and tax credits "drives me crazy." Tesla says on balance, industry incentive structures still benefit traditional, combustion-engine vehicles.
Hong Kong, however relatively petite, is a significant outpost of luxury car buyers and trend setters. Its government had long waived its vehicle registration tax for freshly purchased electrical automobiles, adding to the attraction of Tesla’s cars.
Citing enlargened congestion of privately wielded vehicles on its streets, the government said in February that it would be switching the policy so the tax would be waived only on the very first 97,500 Hong Kong dollars (about US$12,500) of an electrical car’s purchase price for individuals. After the switch came into effect on April 1, the cost of a basic Tesla Model S in Hong Kong effectively rose to around US$130,000 from less than US$75,000.
The diminished waiver, which doesn’t apply to sales of commercial electrified vehicles such as buses, is effective through March of next year. The government says it will review the policy before then.
The Hong Kong registrations data don’t showcase actual sales figures but are a close proxy because fresh cars in Hong Kong must be registered to be driven. The May figure, which hasn’t been published, was provided to district council members and viewed by the Journal.
The end of the tax exemption "has indeed put the brakes on electric-vehicle adoption in Hong Kong," said Mark Webb-Johnson, a founder of Charged Hong Kong, a group that promotes electrified vehicles.
Tesla doesn’t break out vehicle sales by country or region and declined to discuss specifics in Hong Kong. But it acknowledged in a statement a slowdown, calling it "expected" following the tax switch and a "short-term" challenge. The company said it resumes to sell vehicles in Hong Kong each quarter and expects "the Hong Kong market will proceed to be very strong over the long-term because it’s clear that the people of Hong Kong love our cars."
The reversal in Hong Kong comes as Tesla is planning to expand in mainland China, the world’s largest fresh car market. Last month, Tesla said it was exploring with the Shanghai city government the possibility of opening a manufacturing facility in China. China charges a 25% duty on all imported cars.
Dave Sullivan, an analyst for the consulting stiff AutoPacific Inc., said the Hong Kong decline could foreshadow challenges for Tesla as a luxury brand in China.
"Hong Kong is the fashionable China," he said. "It’s not exactly painting a glowing picture for the future of Tesla in China."