The EU slashes tariffs on China-made Tesla EVs to 9%, down from 20.8%, potentially boosting sales. Other Chinese EV makers face higher tariffs in the EU market.
The European Commission has made a significant decision that could reshape the landscape of electric vehicle (EV) sales in Europe. In a move that might spark a surge in Tesla's market presence, the EU has slashed the additional tariff on Tesla vehicles manufactured in China from the previously planned 20.8% to just 9%. This adjustment is notably lower than the tariffs imposed on other Chinese EV manufacturers, which range from 17% to 36.3%.
What Led to the Tariff Reduction?
The tariff reduction comes after Tesla requested an individual assessment concerning the European Commission’s punitive tariffs on China-made EVs, initially outlined in July. The EU's concern was rooted in what it deemed "unfair" subsidies provided by Beijing to Chinese EV manufacturers, which the Commission argued could cause "material injury" to European carmakers.
However, the Commission concluded that Tesla received fewer subsidies from the Chinese government compared to other manufacturers. Tesla’s primary benefits were from below-market value battery supplies, favorable land use, and income-tax reductions for exporters in China. These findings influenced the decision to lower the additional tariff on Tesla’s China-made EVs, which is on top of the existing 10% duty applied to all Chinese EV imports.
Implications for Tesla and the European Market
If approved by a majority of the 27 EU member states before the October 31 deadline, the new 9% tariff will remain in effect for the next five years. This could lead to a significant boost in Tesla’s sales across Europe, as the reduced tariff makes China-manufactured Tesla vehicles more competitively priced.
Impact on Other Chinese EV Manufacturers
While Tesla sees a reduction, other Chinese EV manufacturers face steeper tariffs. For instance, SAIC Motor Corp. is now subjected to a 36.3% tariff, while Geely and BYD Co. face tariffs of 19.3% and 17%, respectively. These rates are still slightly lower than initially proposed, especially for manufacturers who cooperated with the EU’s investigation. Dongfeng Motor Group Co. and Nio Inc., for example, received tariffs of 21.3%, whereas non-cooperative manufacturers face the highest tariff of 36.3%.
The Chinese Response
China’s Ministry of Commerce has expressed strong opposition to the EU's ruling, arguing that the decision was based on "facts unilaterally determined by the EU side, not on facts mutually agreed upon." The ministry contends that there is insufficient evidence to prove that Chinese EV imports have caused substantial material injury to EU carmakers.
A Decline in Chinese EV Exports to the EU
The new tariffs have already had a noticeable impact on Chinese EV exports to the EU. Dataforce reports a 45% quarter-on-quarter drop in registrations for China-made EVs, such as those from BYD and MG, in July. Additionally, the China Passenger Car Association (CPCA) revealed a 15.2% decline in exports of China’s new energy vehicles (NEVs), including pure electric vehicles and plug-in hybrids, from May to June.
BYD’s Resilience in the Face of Tariffs
Despite the regulatory challenges, BYD, China’s best-selling NEV brand, has managed to increase its market share in the EU to 8.5% as of July. The carmaker has successfully weathered the tariff storm, overtaking Tesla as the world’s biggest EV seller in the final quarter of 2023. BYD plans to launch its most affordable model, the Seagull, in Europe next year, and anticipates maintaining profitability despite the new tariffs, as its vehicles sell at nearly double the price in Europe compared to China.
A Shifting EV Landscape in Europe
The EU’s decision to reduce tariffs on China-made Tesla vehicles could lead to a significant increase in Tesla's market share in Europe. However, the higher tariffs imposed on other Chinese EV manufacturers reflect ongoing tensions between the EU and China regarding trade practices and subsidies. As these dynamics continue to evolve, the impact on the global EV market will be closely watched by industry stakeholders and consumers alike.
Source: Euronews
Comments