EU Proposes New Tariffs on Tesla and Chinese Electric Vehicles

EU Proposes New Tariffs on Tesla and Chinese Automakers

The European Union is set to implement a new tariff structure that would impose an additional 9 percent tariff on Tesla vehicles imported from China. This move comes as part of a broader strategy to shield European manufacturers from what officials deem unfair competition. In comparison, other automakers could face tariffs as high as 36.3 percent on their electric vehicles (E.V.s) imported from China.

The updated tariff rates, unveiled in Brussels on Tuesday, signify a notable increase for major companies producing electric vehicles in China, aimed at establishing a more equitable marketplace alongside Chinese E.V. manufacturers that generally benefit from substantial subsidies provided by the Beijing government. These new tariffs will be added on top of the existing 10 percent already levied on electric vehicles originating from China.

Since October, the European Union has been investigating the practices of Chinese automakers. Officials revealed that Tesla’s tariff was reduced from an initially proposed 21 percent due to the fact that the company does not receive the same extensive subsidies from the Chinese government as many of its leading counterparts. At this time, Tesla has not provided a response to requests for comments regarding these developments.

For Chinese automakers, the new tariff rates that are set to last for a duration of five years have seen slight adjustments from the original proposals made in June. These rates will range from 17 percent for BYD, the largest electric vehicle producer in China, up to 36.3 percent for SAIC Motor, the state-owned manufacturer behind the MG Motor brand. In contrast, Geely Auto, which owns Volvo Car, will face a tariff of 19.3 percent.

Notably, companies that cooperated with the EU’s investigation, such as renowned German automakers BMW, Mercedes-Benz, and Volkswagen, will incur tariffs of 21.3 percent on the vehicles they produce in China. Unlike Tesla, which operates an independent production facility in Shanghai, these German manufacturers are engaged in joint ventures with local Chinese companies. Volkswagen, in particular, faces additional challenges since it has a partnership with SAIC, meaning some of its vehicles will be subjected to the highest tariff rates.

When compared to the 100 percent tariffs that the Biden administration imposed on Chinese E.V.s back in May, the proposals from the European Union reflect a strategic approach to balance maintaining trade relations with China while simultaneously protecting domestic production capabilities. Following the announcement of the initial tariffs, several Chinese automakers have indicated plans to shift their manufacturing operations to Europe.