Electric vehicle (EV) manufacturers are concerned about the increased tariffs imposed and set to commence this year. Consumer favorite, Tesla, might face the same fate.
Consumers Love for the Tesla Brand
According to MarketWatch, Tesla has dominated the American EV market share since 2023. Tesla comes in at 56.3%, other brands collectively 23.5%, Chevrolet 5.9%, Ford 5.8%, and Rivian 3.7%.
No One Is Safe From the Tariffs
While the increase was directed toward the Chinese market, other Western EVs and HPEVs (hybrid Plug-In Vehicles) can also face the same consequences. Tariffs may impact Tesla and potentially increase the selling prices of models.
EV Cars From Chinese Production Line
Cars imported to the E.U. and produced in China are at risk of paying those hefty import tariffs on electric vehicles. The news came earlier this year, with the E.U. and the U.S. imposing tariffs.
Tesla Might Pay Too
The announcement has raised concern among Western-driven car markets like BMW and GM, which produce vehicles in China. Tesla is not safe from the tariffs either, and it may have to dock up for each of its electric vehicles being brought through.
Tariff Rise 35%
For Chinese electric Vehicle makers, the tariffs have been set at 38%. The decision is not final, and there is still a limited time for final negotiations between the Chinese manufacturers and the E.U.
Special “Calculated” Tariff for Tesla
In an interview with CNBC, Valdis Dombrovskis, the E.U. commissioner for trade, commented that Tesla may receive “an individual calculated duty rate.”
China is the Main Gigafactory for Tesla
Like other manufacturers, Tesla relies on China to manufacture its cars and parts. One of the company’s largest factories for parts, electrification, and decarbonization is in Shanghai, China.
Mass Production
According to CNBC reports, the Chinese state media noted that the Tesla brand transported over 940,000 vehicles from the Shangai factory last year. 600,000 cars were for the Chinese market, and others were exported.
Plea for a Lower Fee
Dombrovskis also reported that the EV manufacturer has made a plea to lower the tariffs. The case is being assessed, and a decision has yet to be made regarding lowered rates for popular American EV manufacturers.
Negotiating the Fee
The commissioner will assess various factors as part of the assessment. “We can also look more in-depth at a specific situation of Tesla and subsidiaries…” Dombrovski said. The subsidiaries will involve what the company has received from China, which can alter the duties specified for Tesla.
Biden Admin Enforce 100% Tariff
Shortly after the U.S. Biden administration announced the tariff increase on Chinese EV imports at 100%, the E.U. followed suit.
Tesla CEO Spoke Out
Tesla’s CEO, Elon Musk, disagreed with the tariffs raised by the Biden administration. Like many other investors and stakeholders, Musk is concerned about the negative impact the tariffs will have on EV manufacturers. “Neither Tesla nor I asked for these tariffs,” he said in an interview with CNBC anchor Karen Tso. He also confirmed his sheer surprise to learn about the tax increase.
Tariff Prices Vary
The tax rate for EV makers varies among car manufacturers. SAIC Motor Corp will pay a 38.1% additional tax. SAIC also produces the MG brand in China. Cars made by Chinese manufacturers like Geely Holding Group, which also manufactures the Swiss Volvo brand, will be charged 20%. BYD Co is said to receive a 17.4% levy.
What’s Caused the Rates Increase?
There are fears that China will “dump mass-produced cheap products” faster than its own economy can cope with. Solar products, metal, and cars are just some of the items China has produced by the masses, causing an excess overflow.
E.U. President (Chamber of Commerce) Spoke Out
“Europe cannot just accept the strategically viable industries constituting the European indusrial base are being priced out of the market.” Jens Eskelund, the E.U. President of the Chamber of Commerce in China, said in an interview with CNN.
Chances of Discounted Tariffs
According to reports, discounted tariffs could also be a reality. EV manufacturers that cooperated with the commissioner and the investigation surrounding claims of “cheap governemnt subsidiaries” flooding the market will be rewarded. The reward is a reduced tax of 21% weight. Non-cooperative EV manufacturing companies would be eligible to pay the 38.1% tariff rate.
Only time will tell how these rates will affect the future U.S. and E.U. electric car sales amongst consumers.
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
