Brussels initially indicated that it planned to introduce duties of 20.8 percent on the American carmaker.
The European Union said on Tuesday that it intends to lower a planned additional tariff on Tesla’s electric vehicles (EVs) imported from China to 9 percent amid the bloc’s ongoing probe of Chinese state aid to carmakers.
Brussels initially indicated that it planned to introduce additional duties of 20.8 percent on Tesla vehicles manufactured in China.
The decision to lower the additional tariff to 9 percent followed a “substantiated request” from Tesla to reevaluate the duty rate to reflect the level of subsidies it receives from China, according to a separate statement issued on Tuesday.
The commission stated that after conducting an investigation, including visits to Tesla’s factories in China, it found that Tesla receives fewer subsidies from Beijing than the domestic EV producers scrutinized by Brussels.
The latest plan still represents an increase in duties the EU imposes on China-made car imports. The tariffs will be added to the standard 10 percent duty that the bloc applies to all imported cars.
Brussels’ decision to levy extra duties follows a months-long investigation, which found that China’s EV producers benefit from what it said are unfair state subsidies from the Chinese communist regime. The subsidies pose a “threat of economic injury” to its homegrown auto business, the commission said in July.
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Three Chinese EV carmakers that Brussels investigated will also receive slightly lower provisional duties. BYD is set to pay a tariff of 17 percent, slightly lower than the 17.4 percent the EU originally prescribed. Geely will pay a rate of 19.3 percent instead of 19.9 percent.
SAIC Group, a Chinese state-owned carmaker, will still face the highest import rate of 36.3 percent.
The European Commission, the executive arm of the EU, said the proposed duties are not designed to bar Chinese car imports into the EU market. Rather, the commission seeks to address “the substantial unfair competitive advantage” that benefits Chinese EV makers due to the “unfair subsidy schemes in China.” It said that the purpose of such duties is to ensure that EU and Chinese industries compete on a level playing field.
Based on the draft plan released on Tuesday, the maximum provisional duty will be reduced from the previously indicated 37.6 percent to 36.6 percent for companies that did not cooperate with the commission’s anti-subsidy investigation. The adjustment is due to “substantiated comments received from the interested parties on the provisional measures.”
The EU’s current anti-subsidy investigation is set to be completed in two months.
Following this period, the proposed tariffs could become the EU’s definitive duties, which typically remain in effect for five years, if the majority of the bloc’s 27 member states support the plan in October’s vote.
BYD electric cars are stacked at the international container terminal of Taicang Port at Suzhou Port, in Jiangsu Province, China, on Sept. 11, 2023. AFP via Getty Images
The flood of cheap EV exports from China, driven by years of state subsidies, has emerged as a new source of contention with its trade partners, especially Brussels and Washington. The Biden administration has imposed 100 percent duties on EVs shipped from China, marking a fourfold increase from the previous 25 percent duty.
In response to Brussels’ scrutiny of its state aid, the Chinese regime has threatened to take “all necessary measures” to defend its rights and interests. The regime has already initiated an anti-dumping investigation into pork imported from the EU. The move followed a similar investigation into European brandy, particularly cognac, launched in January.
Earlier this month, Beijing filed a complaint with the World Trade Organization (WTO) over Brussels’ proposed duties. China’s Ministry of Commerce said it was a step necessary to safeguard its EV industry’s development rights and interests.
On Tuesday, the commission said the WTO consultation wouldn’t affect the timeline of the ongoing anti-subsidy investigation into China-made EVs.
“The EU is carefully studying all the details of China’s WTO consultation request and will react to the Chinese authorities in due course, according to WTO procedures,” the commission said in a statement.
“The Commission is confident of the WTO-compatibility of its investigation and provisional measures.”
