The European Commission’s recent decision on tariffs for Chinese-made electric vehicles (EVs) has sparked significant discussion in the automotive and economic sectors. This decision particularly affects Tesla Inc (TSLA), as its cars made in China are now subject to a 9% tariff when exported to the European Union (EU). This rate is significantly lower than the average 21.3% tariff imposed on other cooperating companies and the 36.3% tariff levied on non-cooperating firms.
Tesla’s lower tariff is a direct result of its proactive engagement during the EU’s investigation into Chinese subsidies. The company submitted an individual petition, securing a more favorable tariff rate. This outcome demonstrates the nuanced impact of EU trade laws and the importance of proactive engagement by companies.
In contrast, other major Chinese EV makers like BYD will face a 17% tariff, reflecting less favorable terms from the EU. These tariffs are part of the EU’s strategy to address what it considers unfair competition stemming from Chinese subsidies, including state support for below-cost batteries and direct incentives. The investigation found that BYD and Tesla received substantial subsidies, $3.7 billion and $426 million respectively, contributing to their enhanced production capabilities in China.
For the time being, the EU has deferred interim duties on Chinese EV imports until the final decision in October to avoid disrupting the competitive balance among European EV manufacturers. Looking at Tesla’s financial performance, the company’s stock has displayed both resilience and volatility in response to corporate and regulatory changes. After falling below $200, Tesla’s share price rebounded by 22%, now trading above this crucial level. This bounce back signifies strong market confidence in Tesla’s value and stability despite external challenges.
Tesla’s stock has been fluctuating within a range, from a low of $100 in January 2023 to a high of $300 in July 2023, indicating a period of consolidation. Investors are closely monitoring the stock for a breakout that could signal an uptrend. A move above $300 could suggest future gains and potentially a return to the all-time high of $441 reached in November 2021. As of Tuesday, August 20, the stock closed at $221.10, down by 0.73% after the closing bell.
