EU Tariffs On Chinese EVs Spark Legal Challenge From Tesla

Tesla has taken legal action against the European Commission over tariffs on electric vehicles manufactured in China. The case, filed by Tesla’s Shanghai subsidiary, disputes the EU’s decision to impose anti-subsidy duties, which range from 7.8% for Tesla to 35.3% for other manufacturers, in addition to a 10% import tariff.

The EU introduced the tariffs in late 2024 following an investigation into Chinese government subsidies. Officials argued that China’s financial support for its EV industry gave its automakers an unfair advantage, allowing them to dominate global markets with lower production costs. The tariffs are intended to protect European manufacturers and will remain in effect for five years.

Tesla’s lawsuit is one of several challenges to the tariffs, with BMW and Chinese automakers also filing complaints. BMW described the measures as harmful to global trade and called for diplomatic solutions to avoid escalating the conflict. German automakers have significant investments in China and worry that the tariffs could backfire, disrupting their access to the massive Chinese market.

Elon Musk, Tesla’s CEO, has become increasingly critical of the EU, calling the bloc’s leadership “undemocratic.” His appearance at a campaign event for Germany’s Alternative für Deutschland (AfD) party has further strained relations with European leaders. Musk’s platform X is also under investigation by EU regulators for alleged failures to prevent election interference in member states.

The EU’s investigation found that Chinese EV producers benefited from favorable policies, including free land for factories, low-interest loans, and tax breaks for battery makers. These subsidies were deemed to undermine fair competition in the global EV market.

Tesla’s Shanghai factory supplies a large portion of its vehicles to Europe. In 2023, Tesla accounted for nearly 28% of all Chinese-made EV imports into the EU, leaving the company exposed to these new tariffs despite facing the lowest rate among competitors.