The European Commission has made a significant decision to reduce the import duty on Tesla vehicles manufactured in China, potentially opening up new opportunities for the electric vehicle (EV) market in the region. This move could lead to a surge in sales for Tesla and other Chinese EV manufacturers, as the previously proposed tariffs had caused a sharp decline in exports to the EU.
The EU has slashed the additional tariff on Tesla EVs made in China to 9%, down from the previously planned 20.8%. This new rate is much lower than the range of 17% to 36.3% imposed on other Chinese EV manufacturers, which could give Tesla a competitive edge in the European market. However, the plan is still subject to approval by a majority of the 27 EU member states before 31 October, and if approved, the new tariffs will remain in effect for the next five years.
The decision to reduce tariffs on Tesla vehicles followed the company’s request for an individual assessment regarding the European Commission’s tariffs on China-made EVs, which were initially outlined in July. The EU had concerns about Beijing’s subsidies to the industry, which were deemed „unfair“ and potentially harmful to EU car manufacturers. After conducting an investigation, the Commission found that Tesla received fewer subsidies from the Chinese government compared to other manufacturers.
In addition to the existing 10% duty applied to China’s EV imports, the EU has also revised duties on other Chinese carmakers. SAIC Motor now faces a 36.3% tariff, Geely a 19.3% tariff, and BYD a 17% tariff, all slightly lower than the previous proposals. Chinese EV makers that cooperated with the EU’s investigation have been assigned lower tariffs, with Dongfeng Motor Group and Nio facing a 21.3% tariff, while those who did not cooperate may face a 36.3% tariff.
The Chinese Ministry of Commerce has responded to the EU’s ruling, stating that it was based on „facts unilaterally determined by the EU side, not on facts mutually agreed upon.“ China has expressed significant concern and opposes the ruling, arguing that there is insufficient evidence that Chinese EV imports have caused „substantial material injury“ to EU car makers.
The impact of the tariffs on Chinese EV exports to the EU has already been felt, with registrations for China-made EVs dropping significantly in recent months. BYD, however, has managed to weather the regulatory challenges and increase its market share in the EU EV market. The Chinese carmaker plans to launch its most affordable model, the Seagull, in Europe next year, further expanding its presence in the region.
The tariffs imposed by the EU could potentially raise EV prices in Europe, making them less accessible to average consumers. This could slow down the push for net zero emissions and delay the availability of more affordable EVs in the region. ING has highlighted the disparity in EV prices between China and Europe, noting that the proposed measures would make EVs even more expensive for European consumers.
Overall, the reduction in import duties on Tesla vehicles manufactured in China by the European Commission could have a significant impact on the EV market in the region. It remains to be seen how this decision will shape the future of EV sales and production in Europe and China.