Tesla Motors, the electronic car startup co-founded by PayPal billionaire Elon Musk, announced that Model S will be sold for 734,000 yuan (US$121,280), lower than over 1 million yuan as previously speculated by the public.

Tesla claimed this is a fair price, although it is still about 40% more expensive as compared with $81,070 in the U.S. According to Tesla, the extra amount is generated from taxes, customs duties, and transportation costs. The company also breaks down the amount to $3,600 for shipping and handling, $19,000 for customs duties and taxes, and $17,700 for VAT.

Conventionally, international cars will always be priced higher in China than in domestic or Western markets, allegedly for high tariffs. Tesla blasts the competitors in the announcement, stating that “the real reason their car costs more is that they make double the profit per car in China compared to the United States or Europe”.

However, Tesla’s price is still quite high for most Chinese consumers, partly due to its perceived status as luxury goods. E6, an electric motor developed by Chinese automobile maker BYD is priced at 309,800 yuan ($51,227), while SPRINGO’s electric car is sold for 259,000 yuan.

Spotting the growth potentials of luxury vehicle market in China, Tesla opened its first showroom in Beijing  and launched a Chinese website Tuosule.cn to take pre-orders in 2013. The global sales of Tesla Model S reached 22,300 in 2013, Tesla announced recently.

image credit: Tesla

Emma Lee

Emma Lee is Shanghai-based tech writer, covering startups and tech happenings in China and Asia in general. We are looking for stories related to tech and China. Reach her at lixin@technode.com.