China is Currently Holding 1600 Teslas at Customs

Tesla Model 3 Model Y

Tesla Model 3 Model Y

A Tesla Model 3 vehicle leaves a cargo vessel at a port in Shanghai, China February 22, 2019.

"Sales of Model 3 in the country are not impacted, and we continue to deliver Model 3 vehicles that have already been processed".

In its Q4 Update letter, Tesla said that "In January 2019, we started to produce Model 3 vehicles for Europe and China, and the auto is now fully certified for sale in these markets".

However, Daniel Ives, analyst at Wedbush Securities, said: "Selling into China has clear hurdles and this is a reminder of the pitfalls when betting on growth in the region".

Some of the vehicles had no Chinese labels on brake fluid tanks, while some demonstrated a real motor capacity that differed from the one on the label, according to the General Administration of Customs (GAC).

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The plant, Tesla's first outside the USA, is scheduled to start production by the end of this year.

The electric vehicle (EV) maker is now working with the Chinese government to find a solution to the customs clearance procedures and the issues with labeling, Caixin reported.

A total of 1,171 Model 3 sedans arrived at north China's Tianjin Port, after 84 such cars were imported via the port in February, China's state news agency Xinhua reported here on Tuesday.

Tesla is hoping to reduce the cost of producing and transporting the Model 3 by making the vehicle at its own manufacturing site near Shanghai, where construction began in January.

Tesla Inc Chief Executive Officer Elon Musk said on Monday production of the $35,000 version of the electric carmaker's Model 3 will start this month, but would not reach volume production until mid-year.

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