The European Commission has issued an update to its sweeping investigation into “unfair” Chinese government subsidies for electric cars, saying Tesla will face a 9% tax on Chinese-made cars exported to the EU.
The tariffs on Tesla are much lower than the average 21.3% imposed on companies that cooperated with the EU investigation and the 36.3% average on those that did not, and were imposed after the California-based company requested individual action as part of Brussels’ broader investigation.
The tariffs are much lower than the 100% tariffs imposed by the US and are on top of the existing 10% tariffs the EU imposes on EVs from China.
EU officials, who visited Tesla’s Shanghai facility in June, said on Tuesday that the company has benefited mainly from low-cost batteries as well as Chinese government subsidies, including cheap land and subsidies for exporters.
The 9% tariffs will be applied by October 31st at the latest, subject to approval by EU member states.
Tesla’s decision came as the European Commission announced it would slightly reduce tariffs on Chinese-made EVs after technical discussions with the two companies.
Under the latest proposal, China’s BYD, which rivals Tesla for the title of world’s largest electric car maker, would be hit with a 17% tariff, Geely with 19.3% and SAIC with 36.3%. The tariffs on those three companies have been revised downwards since the provisional measures were announced in June and could be changed again.
EU officials also said Tuesday that no companies will have to pay provisional tariffs until the deadline, which is expected to come into effect by the end of October. The companies are exempt from the tariffs because EU officials concluded that European automakers face a “threat of harm” rather than actual harm such as factory closures or job losses.
EU officials said that without action, the rise in subsidy-fueled Chinese EV exports would soon cause “significant harm” to EU producers, adding: “Our law allows us to act before jobs are laid off and factories are closed.”
Earlier this year, the Kiel Institute for the World Economy think tank estimated that China’s support for EVs will be around $5.6 billion (€5.05 billion, £4.3 billion) by 2022, when direct payments to manufacturers are phased out.
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The biggest beneficiary so far has been BYD, which received $3.7 billion. Tesla’s aid is smaller than its Chinese rivals, but it is the second-largest recipient, receiving about $426 million in support for its Shanghai factory.
China trade website Soapbox this week analysed figures from Eurostat, the European Commission’s data agency, and Chinese customs authorities and found that 45% of Beijing’s total exports of electric cars between June 2020 and June 2024 were headed to the EU.
Exports by Chinese manufacturers surged in April ahead of the expected tariffs, while import registrations of Chinese-made EVs rose from April to May before falling, according to customs data.
