Tesla seeks equal treatment in the European Commission investigation into Chinese subsidies for electric automakers, E&E News reports, citing a letter from the Musk-led company. It is apparently part of Tesla’s efforts to ensure lower duties ahead of the EU’s imminent imposition in the coming weeks.
Call for a hearing
Tesla China has requested a hearing with the European Commission in the said letter, dated March 27, 2024, after the latter excluded it from the list of electric automakers subjected to the Chinese subsidies probe.
The European Commission has already reaffirmed its provisional sample selection in a final decision on Friday.
As indicated in the letter, Tesla is “open for inspection” and is also willing to welcome EU inspectors to its electric vehicle production plants. For context, the EU selected BYD, SAIC, and Geely to conduct such visits.
Tesla contends in the letter that “given the percentage of Chinese exports that Tesla represents, it is inevitably in a particular situation compared to other, much smaller exporting producers.”
If the European Commission adheres to Tesla’s request, EU inspectors must visit Giga Shanghai in the summer.
Implication of Tesla’s exclusion from the probe
Considering that Tesla is currently the largest electric vehicle exporter from China into Europe, it is unsurprising that it seeks inclusion in the EU’s ongoing subsidy probe.
Suppose the European Commission does not change its mind about Tesla’s exclusion. In that case, its lawyers warn it could unfairly receive countervailing duties imposed based on Chinese subsidies placed on other automakers.
“The Commission’s decision to exclude from the sample the by far largest exporting producer is entirely unprecedented and untenable.”
Steptoe & Johnson’s legal response
Commercial reason
The electric automakers in the EU probe’s sample help determine the amount of subsequent countervailing duties.
Once the European Commission unveils proof of subsidies in BYD, SAIC, and Geely, it will then use it as the basis for the average extra duty for all China-made EV imports. It will affect those electric automakers excluded from the sample, such as Tesla.
Commission spokesperson Olof Gill noted that excluded companies from the list get a “weighted average of these individual duties.” The spokesperson said, “the Commission does not automatically sample all companies that want to be sampled.”
Interestingly, independent automotive analyst Matthias Schmidt suggests that increasing the price of Tesla’s China-made EVs through import duties may force it to expand its local production in Europe.
“This may be a way of showing them to divest in China and reinvest more production in Europe, creating some much needed jobs in Europe. This would be a call to Tesla to shift European Model 3 production from China to Europe.”
Matthias Schmidt, Independent automotive analyst
It is indeed unreasonable for the European Commission to exclude Tesla, considering that it exports way more EVs than the three chosen electric automakers: BYD, SAIC, and Geely.
