The European Union (EU) is set to impose a 19% import tariff on Tesla vehicles entering the EU from China. This rate is lower than the one applied to Chinese electric vehicle manufacturers. The EU Commission revealed on Tuesday that Chinese-made Teslas may face an extra 9% levy in addition to the standard 10% duty placed on all imported cars.
This decision surfaced following Tesla’s bid for a unique assessment of its Chinese operations intending to circumvent steeper rates that Brussels enforced on Chinese manufacturers, which could reach up to 47 per cent. Tesla had protested about the probe to various EU nations, according to an EU diplomat.
There was no instant response from Tesla to a comment request. The EU’s Chinese Chamber of Commerce firmly rejected the tariffs, expressing that there was inadequate evidence to suggest European electric vehicle market would be impacted by Chinese imports.
Highlighting that it is not subsidisation but aspects such as factory size, all-inclusive supply chain benefits and fierce market rivalry promoting the competitiveness of China’s electric vehicles. EU officials have suggested that Tesla’s Chinese division has profited from subsidised land rates, income tax relief and advantageous battery purchasing rates among other support from Beijing.
These tariffs are part of the EU’s proactive strategy against China’s heavily subsidised imports, particularly focusing on vital green energy assets, such as wind turbines and solar panels. This move follows the investigation initiated by EU Commission President Ursula von der Leyen into Chinese electric vehicle imports in September last year, which was prompted by increasing evidence-based worries over the surge of inexpensive electric vehicle exports from China heading to the EU.
In response, China has lodged a grievance at the World Trade Organisation and instigated its own anti-dumping investigations against French cognac and EU pork imports. Following an initial evaluation, the commission declared in June that Chinese car producers like BYD and Geely might be subject to unexpectedly high tariffs of up to 48% for vehicles imported into the EU.
On Tuesday, these rates saw a slight decrease after being presented with more data by the Chinese firms. The top supplementary tax was cut by roughly 1 per cent. Currently, these tariffs are covered by bank guarantees before the approval of the member states’ measures, with a deadline set for 30th October. If the EU nations decide in favour, the duties will be enforced for a half-decade period.
According to an EU representative, there existed a “chance” of Chinese car makers accruing stock in anticipation of the imminent tariffs, though it was admitted that transporting them from China requires time. Additionally, others said that they were in “vigorous” talks with their Chinese equivalents to seek “a different resolution”.
An official stated, “We welcome China presenting suggestions that would tackle the issue in the same approach as a tariff, but the onus is largely on them.”
In the past few months, the electric vehicle sector in Europe has faced hardships due to decreasing consumer sentiment. For example, the elimination of aid for EV purchases in Germany has led to “notable annual losses” for manufacturers, as stated by Schmidt Automotive Research.
In a distinct report released the previous week by SAR, they discovered that over the time leading to the final duties implementation, exports to the EU by Chinese manufacturers have escalated. – Copyright The Financial Times Limited 2024.