Elon Musk's Tesla Gets A Breather As EU Slashes Tariffs On Its China-Made EVs Even As SAIC, Geely, And BYD Face Hefty Duties

The European Union has decided to slash tariffs on electric cars made by Tesla Inc. TSLA in China, a move that could potentially reshape the electric car market in the region.

What Happened: The EU has lowered the tariffs on Tesla’s China-made electric vehicles, setting them significantly lower than those imposed on other electric car manufacturers.

The European Commission’s decision comes two months after the EU raised tariffs on electric cars imported from China, citing unfair state subsidies.

Initially set at 20.8%, the tariff on Tesla’s China-made vehicles has now been reduced to 9% by the European Commission, the EU’s executive arm. This is in addition to the existing EU duty of 10% on all electric vehicle imports, but it still remains considerably lower than the additional tariffs imposed on other Chinese automakers, ranging from 17% to 36.3%.

The European Commission stated that the new tariff reflects the level of subsidies Tesla receives in China. This decision could potentially give Tesla a competitive edge in the European market.

The Chinese state-owned carmaker SAIC Motor, owner of the iconic MG brand, has been slapped with an additional 36.3% tariff, designated for "non-cooperating companies," according to the European Commission.

Geely Automobile GELYF GELYY, which owns Volvo, faces an extra 19.3% tariff, while cars produced by BYD BYDDY BYDDF, currently competing with Tesla for the title of the world’s top battery EV seller, are now subject to an additional 17% duty.

See Also: Tesla Cybertruck Lead Engineer Confirms Rear-Wheel Drive Variant Of Stainless Steel Truck Has Not Been Canceled

Why It Matters: The reduction in tariffs for Tesla vehicles comes amid a broader context of trade tensions between the EU and China. In June, Chinese carmakers reportedly urged Beijing to increase tariffs on European gasoline-powered cars in retaliation for the EU’s tariffs on Chinese EVs.

The European Union has proposed tariffs of up to 38.1% on Chinese electric vehicles, which EU leaders framed as a measure to counter unfair competition. However, investors see these additional costs as a minor hurdle for China’s leading EV manufacturers.

In July, Chinese EV makers began pivoting to alternative markets such as Africa, Southeast Asia, and South America, amid the tariff hurdles imposed by the EU and the U.S. This strategic shift was seen as a way to mitigate the impact of protectionist policies.

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Photo courtesy: Shutterstock

This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote