Tesla challenges EU tariffs on Chinese EV imports despite receiving discount rate

Tesla is taking legal action against the European Union (EU) over tariffs imposed on Chinese-made electric vehicles (EVs), despite being granted the lowest rate among car manufactures importing into the region.

The lawsuit was filed last week by Tesla’s Shanghai division with the General Court of the EU in response to last year’s move by the European Commission to apply new tariff rates on Chinese EV imports to address concerns about unfair competition.

Its 2023 investigation concluded that Chinese EV manufacturers, including Tesla’s Shanghai operations, benefited from government subsidies such as low-interest loans, cheap land, and supplier discounts and gave Chinese EVs an unfair edge over European-made vehicles.

As a result, the EU imposed anti-subsidy tariffs in late 2024, with rates ranging from 7 to 36 per cent, in addition to the exiating 10 per cent import tariff on vehicles.

Tesla was assigned a 7.8 per cent tariff, as it was judged to have received minimal support from the Chinese government compared to competitors like BMW, BYD, Geely, and SAIC - all of whom are also challenging the tariffs in court.

Tesla has also asked the Canadian government to lower its 100 per cent tariff on Chinese EVs. However, Tesla has not challenged similar tariffs in the United States, where it does not sell Chinese-made vehicles.

Around 20 per cent of all EVs sold in the EU last year were produced in China.

The case will now proceed through the General Court, where proceedings typically take 18 months and can be appealed.

Meanwhile, European car manufacturers and suppliers welcome new strategic talks  with Brussels on the future of the European industry’s competitiveness.

“No more time for reports – the Strategic Dialogue now must deliver real impact based on the Draghi recommendations. We need to move from penalties-driven to market-driven and demand-driven approach to the transition,” said Sigrid de Vries, director general of the European Automobile Manufacturers’ Association (ACEA). “As an immediate priority, EU action to address crippling CO2 2025 compliance fines for light-duty vehicles is an essential must-do to keep our industry competitive.”