EU lowers proposed additional tariff on Tesla's Chinese-made EVs

The European Union has lowered its proposed additional tariff on Tesla’s electric vehicles (EVs) originating from China. The European Commission stated on Tuesday that they would reduce the further margin from 20.8% to 9%. This revision has been made following a new calculation that was ordered by Tesla after showing the actual subsidies that it received from the Chinese government. The new rate is justified by the fact that the Commission determined that Tesla benefited from significantly lower subsidies than some of its peers in China.

The cut in tariffs is one aspect of a larger change in the EU’s investigation into alleged Chinese subsidies for electric vehicles. This investigation, the EU’s most significant-profile probe into Chinese trade policies, has been fiercely opposed by Beijing. The Commission also revised its suggested actions against other Chinese companies maintaining tariffs at up to 36.3 percent that it reached in February, compared to the previous maximum of 37.6 percent recorded in January.

The new tariffs introduced by the EU are to be levied on top of the existing 10% import duty on cars. It is about balancing and correcting what the Commission deems to be unfair subsidies that are distorting the market. The current research from the Commission shows that, although Chinese EV production entails heavily subsidised cost, cooperating companies like Tesla will attract lower tariffs imposed.

The Ministry of Commerce of China strongly denounced the EU’s findings, stating that they are not mutual and were made unilaterally. The Ministry said that it will take all measures to safeguard the interests of Chinese companies and called on the EU to look for realistic ways to address the tension in trade relations. Last week, China opposed the EU strategy at WTO Maybe it’s time to learn a lesson from China According to European Union sources, the Chinese press has openly challenged the EU approach to this matter at the World Trade Organisation earlier this month.

The European Commission's draft findings also affect other Chinese automakers. Companies like BYD, Geely, and SAIC will face revised provisional duties of 17.0%, 19.3%, and 36.3% respectively, slightly reduced from the July proposals. Joint ventures between Chinese firms and EU producers, such as Volkswagen's SEAT and BMW’s Mini, may also benefit from lower tariffs.

The proposed duties will be finalised in about two months, following a period for public comment and a vote by the EU's 27 member states. The definitive tariffs, if approved, are expected to be implemented by October 30.