EU Cuts Planned Tariffs On Tesla's China-Made EVs To 9%

The European Commission announced this AM that, in its ongoing findings of an anti-subsidy investigation into Chinese imports of battery electric vehicles, all Tesla vehicles imported from China will be subject to a 9% tariff. Proposed tariffs on other EV companies were revised slightly ahead of what could become EU trade policy later this year.

Of all the proposed duties on Chinese EVs imported to the EU, Tesla appears to be the big winner and will pay the lowest rate of 9%. Reuters noted the EU "set a new reduced rate of 9% for Tesla, lower than the 20.8% it had indicated in July." 

As for MG maker SAIC Motor Corp., Volvo Car AB parent Geely, and BYD Co., each of these companies face duties of 36.3%, 19.3%, and 17%, respectively. 

Other cooperating companies would be subject to a 21.3% tariff, while non-cooperating companies would be slapped with a 36.3% rate. These rates would be added to the current 10% duty faced by Chinese exporters. 

EU officials explained that Beijing's apparent lack of subsidies for foreign-owned companies was one factor in the tariff calculation. 

The revised draft tariff decision burdens companies that make EVs in China and export them to Europe. The current duty is around 10%. 

The duties are part of an anti-subsidy investigation launched earlier this year. About 100 firms were investigated. The big finding included market-distorting subsidies across China's entire EV supply chain. 

The Commission said EV companies subjected to proposed tariffs have ten days until Aug. 30 to provide comments and request hearings. If a qualified EU majority votes in favor of the final regulation, the tariffs could become law by Oct. 30 and remain in effect for five years, with the option extensions upon review. 

Meanwhile, Brussels and Beijing have been locked in technical talks to find an alternative solution. Any solution would need to comply with the World Trade Organization. 

"The EU is open to reaching an alternative solution on the position of the duties that would be effective and WTO [World Trade Organization] compatible. It would align with WTO rules and provide a solution to the problems we find," a senior EU official told the South China Morning Post. 

SCMP noted, "In other words: the ball is in Beijing's court to come up with something that would have the same desired effect as the duties." 

Beijing has claimed that the proposed duties are protectionist and has threatened trade retaliations. They've threatened to impose duties on EU imports of luxury vehicles, engines, pork, and spirits. Beijing is also challenging the proposed tariffs at the WTO. 

Tesla is the big winner, with the lowest tariff rate.