China is reportedly blocking the sale of Tesla's Model 3 after customs officials found 'irregularities'

Tesla Model 3Reuters/Jason Lee

  • China is reportedly suspending customs clearances, and the sale and use of Tesla's Model 3 car in the country, due to improper labeling, Chinese news agency Caixin reports.
  • The report said the customs authority in Shanghai had found various irregularities in 1,600 imported Model 3 cars, including the improper labeling of the vehicles.
  • Deliveries of the Model 3, Tesla's cheapest model, are set to begin in the country this month.

China is reportedly suspending customs clearances, and the sale and use of Tesla's Model 3 car in the country, due to improper labeling, according to a report from Chinese news agency Caixin on Tuesday.

According to a report from Reuters, which cites Caixin, customs officials in Shanghai reported finding "various irregularities" in 1,600 Model 3s set for delivery in China, including the improper labeling of the cars.

Read more: Elon Musk has started building a Tesla Gigafactory in China, and it could let him dodge Trump's trade war

Tesla, which is aiming to increase sales in China, the world's biggest market for autos, was set to begin deliveries of its cheapest car to customers in China this month. It appears that will now be delayed following the announcement, which came from Chinese customs authorities, Caixin said.

The report added that Tesla has been instructed not to sell or use any Model 3s that have already been cleared by customs.

Chinese authorities also said that inspectors have been ordered "to step up inspections of other imported Tesla models" and block their clearance if similar problems are found, Reuters reported, once again citing Caixin.

The roll out of the Model 3 in China was put on an accelerated timeline late last year after the company stated worries about the impact of trade tensions between Washington and Beijing. Tesla is also in the process of building a $2 billion Gigafactory in Shanghai, a move believed to be motivated by a desire to avoid the trade war.

Tesla has cut the price for its Model 3 in China several times in recent months, with the starting price for the vehicle at 499,000 yuan ($74,000).

Tesla did not immediately respond to a request for comment from Business Insider.

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