Published on August 21st, 2024 | by Sounder Rajen

Tesla Gets Better EU Tariffs And Chinese EVs Don’t, Why Is This?

Funny enough, Chinese built Tesla EVs also get better tariffs than China EVs

The European Union has significantly reduced its proposed additional tariff on Tesla electric vehicles (EVs) imported from China, following further investigations requested by Tesla. Originally set at 20.8 percent, the new extra tariff for Tesla has been lowered to 9 percent.

This revision comes amidst the EU’s highest-profile investigation into alleged Chinese subsidies, which had already sparked retaliatory threats from Beijing. The European Commission’s updated draft findings also suggest that some Chinese companies involved in joint ventures with EU automakers might face lower tariffs than previously planned.

Moreover, the new tariffs will be in addition to the EU’s standard 10 percent duty on car imports. The Commission asserts that these measures aim to create a level playing field by countering what it considers unfair subsidies provided by the Chinese government. Tesla had requested a recalculation of its tariff rate based on the specific subsidies it received.

The Commission also found that Tesla received fewer subsidies compared to other Chinese EV manufacturers under scrutiny. Despite the reduction for Tesla, the Commission maintains that Chinese EV production benefits from extensive subsidies.

As a result, the proposed punitive duties on other Chinese firms could reach up to 36.3 percent, a slight decrease from the initially proposed 37.6 percent for non-cooperative companies. China’s commerce ministry has expressed strong opposition to the findings, labelling them as unilaterally determined and not mutually agreed upon. The ministry has vowed to protect Chinese companies and hopes for a rational resolution to avoid further trade tensions.

On top of that, the Commission’s revised findings also affect other companies. For instance, BYD will face a tariff of 17.0 percent, reduced from 17.4 percent; Geely will see a rate of 19.3 percent, down from 19.9 percent and SAIC will have a duty of 36.3 percent, reduced from 37.6 percent. Chinese firms in joint ventures with EU producers may benefit from these lower rates as well.

Volkswagen’s SEAT subsidiary, which produces the Cupra Tavascan in a joint venture majority-owned by Volkswagen, is expected to see a lower tariff of 21.3 percent. Similarly, BMW’s joint venture producing the Mini EV will also face a reduced tariff of 21.3 percent. The EU’s final decision on these tariffs will be determined in about two months, following a period for public comment until 30 August 2024.