Elon Musk is returning from China with a tax break for his electric car company. Chinese authorities announced on Friday that Tesla (TSLA) has won an exemption from a 10% purchase tax, which will reduce the price that customers will have to pay for a Model 3, Model S or Model X, CNN reports.
Thirty-four carmakers were on the exemption list, which was released by the Ministry of Industry and Information Technology and State Taxation Administration. The list mainly applies to cars made by joint ventures between Chinese and foreign companies, like Daimler (DDAIF) and Toyota (TM). Tesla is the only foreign manufacturer being granted an exemption on its own.
The exemption is designed to benefit companies that make cars using new forms of energy, like electric vehicles. It applies both to cars made in China, as well as imported ones, CNN adds.
The tax break was announced the same day Musk met with Chinese Transport Minister Li Xiaopeng, according to a statement posted on social media by the Transport Ministry.
The deal is significant in part because of how the U.S.-China trade war has escalated. Beijing announced last month that it plans to resume tariffs of 25% on U.S. imports of automobiles and 5% automobile parts in December, CNN noted.
While Tesla has plans for a major facility in China, it still relies on its main plant in Fremont, California to produce vehicles for the world’s biggest car market. In the past, the company has slashed its prices to absorb the cost of Chinese tariffs.
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