I think this is fundamentally wrong: while the Chinese Gigafactory is in Shanghai, it's not in the Shanghai Free-Trade Zone (which is subject to tariffs), but on
mainland China. Tesla will be a 100% foreign owned but
domestic carmaker in China.
So not only will tariffs be 0%, but Tesla cars will also likely be able to get the EV incentives of domestic Chinese EV carmakers, which are very generous: above $7,300 per car:
vincent on Twitter
... because the incentives scale up with battery range and Tesla is able to reach the highest incentive category.
Also note that Chinese EV incentives are not tax incentives like in the U.S., but are directly given to carmakers, regardless of the tax bracket of the person purchasing the car. This widens the number of customers who are able to purchase Teslas.
This is why the Chinese Gigafactory, 100% owned by Tesla, is such a big deal - the Model 3 will be able to reach literally 10x-20x more customers in Chinese market, because instead of $140k starting prices the effective starting prices will be in the $25k range ... Profit margins will also be much better, because instead of 40% of the purchase price being lost to tariffs, there's effective negative tariffs due to the EV incentive. On a $50k ASP Model 3 the incentive plus Tesla's position as a domestic manufacturer is
equivalent to an about -15% tariff.
This is what Elon's trip to China and Beijing and his meeting the #2 Politburo member in the Chinese hierarchy was all about I think.
So please repeat this everywhere you see the Chinese Gigafactory discussed: it's on
mainland China, with a full political buy-in and support from the Chinese political hierarchy all the way from Shanghai to Beijing, which a BFD!