The ongoing trade war between the U.S and China has affected the automobile market with companies shifting most of their operations toward China. China imposed a 40-percent tariff on SUVs coming from the U.S in response to the $34 billion worth of tariffs imposed by the U.S on Chinese goods. China is the world’s largest automobile market which means any rise in prices will cut demand from Chinese buyers.
BMW has retaliated by adding the X3 SUV production in China. BMW officials said this move won’t affect production levels in their Spartanburg plant in South Carolina, U.S. BMW has signed an agreement with Brilliance Automotive Group Holdings, its Chinese partner, to increase vehicle production. Along with the X3, the iX3 electric SUV will also be built in China, however, there is no confirmation regarding other SUVs in the BMW lineup.
Tesla has also signed an agreement with Shanghai for its first plant in the country. Tesla had hinted at a Chinese plant way back in 2014 but hadn’t gone through with the plan until now. The Shanghai factory will be operational from 2020 and it will be Tesla’s first holding outside the USA where the company will build about 500,000 vehicles every year by 2025. As for now, Tesla has increased the prices of its vehicles in China as a result of the tariff.