Europe increases pressure on Chinese EV market with new Tesla tax

By Team IO

The European Commission has introduced a new 9% import duty on Chinese-made Tesla cars. The move comes after an investigation into unfair state aid to Chinese electric car manufacturers. Tesla, previously granted a reprieve and hoped for an exemption, must now accept the increased tariffs anyway. The decision impacts competitors like BYD and Geely, which now pay 17 and 19.3% levy, respectively. With a deadline for feedback on Aug. 30, these preliminary tariffs may be set for five years unless China agrees to reduce subsidies. Brussels will release final findings by Oct. 30.

Impact of the measure

With the new tax, the European Union wants to send a signal to China and its auto industry. The sums involved are significant, given the growing number of electric vehicles (EVs) being exported to Europe from China. Tesla, which previously distinguished itself by requesting a deferral, now faces a concrete 9% tariff.

This decision by the European Commission does not come out of the blue. After a thorough investigation, Brussels concluded that Chinese automakers benefit from state aid, leading to unfair competition. The levies affect Tesla and other players, such as BYD and Geely, which face 17 and 19.3% levies, respectively.

Reactions and market impact

This move by the EU could significantly impact the market positions of the companies involved. The tariffs increase costs, which may ultimately affect consumers. The Chinese government is also now under pressure to respond to the EU’s findings and possibly adjust its subsidy policies.

Car manufacturers have until Aug. 30 to respond to the new tariffs. This is an opportunity for them to voice their concerns or provide additional evidence that could lead to a review of the duties.

The European car market is in flux

The European Commission’s decision underscores the dynamic nature of the global car market, especially when it comes to electric vehicles. The EU is increasingly committed to sustainability and wants to create a level playing field for all manufacturers. The charges are a tool to counter unfair competition and protect local industries.

Cheap, I want it, I’ll buy it. Will China really win?

To beat the Chinese competition, European car manufacturers should focus on their vehicles’ safety and stability, Bernd Maier-Leppla writes.