The European Union said Tuesday that it plans to introduce a 9% tariff on Teslas imported from China, as it notified automakers of its draft decision to move forward with definitive tariffs on electric vehicles shipped from the country.
As the bloc tries to counter subsidies provided to the industry by Beijing, officials said they would continue to consult with manufacturers over the draft decision ahead of a member state vote on the duties that are due to kick in by November.
The proposed tariffs have been revised slightly, with MG maker SAIC Motor Corp., Volvo car AB, parent Geely and BYD Co. each facing additional duties of 36.3%, 19.3% and 17%, respectively.
Other cooperating companies that haven’t been sampled would be hit by a 21.3% rate, while all other non-cooperating would be set at 36.3%. The rates would be imposed on top of existing 10% duties currently faced by exporters from China.
For Tesla Inc., the 9% tariff is relatively welcome news as it’s lower than the duty rate other manufacturers are facing. EU officials said that one factor behind the calculation is that Beijing appears to provide fewer subsidies to foreign-owned companies.
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The bulk of benefits received by Tesla were in the provision of batteries at below market value, EU officials said. Among other schemes it benefited from are land-use rights, income tax reduction and grants in various forms, including a national subsidy that all exporting producers received, the officials added.
The parties now have 10 days, through Aug. 30, to provide comments and request hearings on the proposal. If a qualified majority of member states doesn’t block the measures in a binding vote, the European Commission will publish a final regulation on the tariffs by Oct. 30. The tariffs would then remain in effect for five years, and could be extended after a review.
Brussels and Beijing have been holding talks over the past months to explore whether an alternative solution can be found. The EU has said that any such solution needs to comply with World Trade Organization rules and address the underlying issue of subsidies.
China claims the measures are protectionist and has threatened to retaliate with duties of its own on a range of sectors including, pork, cars with large engines and spirits. Beijing is also challenging the measures at the WTO.
Several member states, including Germany and Hungary, have voiced resistance to the tariffs but the duties would need a blocking majority to be halted.
The EU also said that it plans to grant a lower rate to joint ventures that were not exporting at the time of the investigative period. Those firms would face the same rate as the cooperating party in the venture.
The EU had required the targeted companies to provide guarantees for the provisional tariffs, but officials said the bloc won’t collect them retroactively. The rates of the tariffs could still change before they become definitive, officials said.
