The European Union has reduced its planned additional tariff on Tesla electric vehicles imported from China by more than half after further investigations requested by the company. The European Commission also lowered proposed punitive duties on imports of Chinese-made electric vehicles (EVs), citing alleged unfair subsidies and levelling the playing field. The new reduced extra rate for Tesla is set at 9%, down from the previously indicated 20.8% in July. Some Chinese companies in joint ventures with EU automakers may also receive lower planned punitive duties on Chinese-made EV imports.
The tariffs imposed by the EU on top of the standard 10% duty on car imports are aimed at countering what the Commission deems unfair subsidies and ensuring fair competition in the market. Tesla had requested a recalculation of its rate based on the specific subsidies received, and the Commission verified that it had received fewer subsidies compared to Chinese EV makers investigated by Brussels. However, the Commission still believes that Chinese EV production has benefited from extensive subsidies and proposed duties on other companies of up to 36.3%.
In response to the findings, China’s commerce ministry expressed opposition and concern, vowing to take necessary measures to protect Chinese firms. China hopes the EU will explore proper solutions in a rational and pragmatic manner to avoid the escalation of trade frictions. Beijing has launched a challenge at the World Trade Organization to address the issue. Tesla, one of the cooperating companies with the EU investigation, did not comment on the latest developments.
Three companies sampled by the Commission would receive slightly lower provisional duties than indicated in July, with Chinese firms like BYD, Geely, and SAIC facing reduced rates. Chinese companies in joint ventures with EU producers may also be eligible for lower duties. Volkswagen’s SEAT subsidiary is expecting a lower tariff on its Cupra Tavascan, produced in a joint venture majority-owned by the German automaker. BMW’s electric Mini produced in a joint venture in China qualifies for a lower duty under the cooperating company status.
The proposed tariffs on Chinese-made EVs are subject to a vote by the EU’s 27 states, with interested parties given until Aug. 30 to submit their comments on the findings. The final duties, once voted upon, will be implemented unless a qualified majority of 15 EU members representing 65% of the EU population vote against them. While reaching this threshold is rare, the politically charged nature of the file makes it a challenge. Definitive duties must be applied by Oct. 30, indicating a tight timeline for resolution on the issue.
