Tesla seeks lower import tariffs from EU amid concerns of trade war

Electic vehicle giant Tesla has reportedly made a request to the European Commission to subject imports of their vehicles to a lower tariff than what other manufacturers are being hit with. Currently, the Commission has raised import tariffs as high as 38.1 per cent on Chinese electric vehicles as part of its anti-dumping probe into what it alleges as unfair competition through government subsidies.

This tariff hike has sparked concerns both from Beijing and European automakers. Beijing has described the Commission’s actions as “protectionism" and stated that these measures would strain economic cooperation between the two blocs. Beijing has further stated that they will launch retaliatory measures across multiple sectors, such as agriculture, automotive, and aviation, in order to reduce the impact of the tariff hike.

Tesla fears that a trade war with tariff hikes from either side will hurt their business. Along with the American EV giant, European manufacturers such as BMW, Mercedes-Benz, and Volkswagen have production facilities in China, and they will also face the increased tariff when importing their cars for sale in Europe. Tesla’s Gigafactory in Shanghai is its main export hub and over half of the company’s global deliveries come from this plant. German auto manufacturers on the other hand make around 20 to 30 per cent of their global profits from the Chinese market.

Trade war looms

The Commission alleges that the subsidies that Beijing provides Chinese EV-makers allows these companies to keep prices low in the European market, shifting the status quo within the competition, effectively monopolising the market. This has allegedly enabled the companies to flood European shores with Chinese EVs that are relatively more affordable with features that are either at par or greater than their European counterparts.

As part of their measures to keep Chinese players in check, the European Commission has hiked import duty on Chinese-made cars. On Wednesday, the Commission announced that state-owned SAIC Motor Corp., which owns the British brand MG, will face a 38.1 per cent additional duty. The Commission will additionally slap a 20 per cent duty on cars manufactured by China's Geely Holding Group, which includes Volvo and Polestar, and a 17.4 per cent duty on BYD Co. vehicles.

Check out Upcoming EV Cars in India.