EU Reported to Trim Proposed EV Tariffs on Tesla and Geely

TMTPost -- The European Union will trim some of proposed final tariffs on China-originated electric vehicles (EVs), according to recent reports.

Credit：Tesla

The EU decided to further slightly reduce planned countervailing duties on Chinese-made EVs, with Tesla China winning the largest individual reduction, according to a draft seen by  Mlex. According to the media organization, the new highest rate for Chinese producers that failed to cooperate with the EU』s probe will be set at 35.3%, down from 36.3%.

The EU is set to marginally downgrade its additional tariff rates proposed for EVs that Tesla Inc. and other automakers import from China due to new information that companies have provided, Bloomberg later reported Tuesday, citing people familiar with the matter. It is reported that Tesla』s proposed tariff rate will drop to 7.8% from 9%.

Reuters』 sources echoed the adjustment of tariff rate that Tesla would face. The sources also said that the new rate for Volvo Car parent Geely would be 18.8%, down from a previous 19.3%. For China』s top EV manufacturer BYD Co., Ltd., there is no change to its 17% tariff. The state-owned SAIC Motor Corp. and other companies not cooperating with EU investigation would be levied a up to 35.3% additional tariff rate, on the top of standard 10% import duty for cars.

The European Commission Tuesday its draft decision to impose definitive countervailing duties on imports of battery electric vehicles (BEVs) from China to interested parties.The Commission said it would make a slight adjustment of the proposed duty rates based on substantiated comments on the provisional measures, though it still believes Chinese EV production has been benefited from subsidies. The regulatory body proposed to add up to 36.7% to the current 10% duty faced by Chinese exporters, modestly lowered from the initial maximum planned duty of 37.6% set in the start of July. 

The EU remains open to reaching an effective solution with the Chinese authorities in a World Trade Organization (WTO)-compatible manner, the European Commission said. According to the executive arm of the EU, EV companies subjected to proposed tariffs have ten days until August 30 to provide comments and request hearings. If a qualified EU majority votes in favor of the final regulation, the tariffs could become law by October 30 and remain in effect for five years, with the option extensions upon review.

Based on the latest draft decision,Tesla appears to be the big winner as the EU will impose an extra 9% tariff on Tesla EVs originated from China, much lower than the 20.8% under the provisional duties that took effect in July.

The EU has slightly lowered tariff rates that three sampled Chinese EV makers. The additional individual duties on BYD, Geely and SAIC would be 17%, 19.3% and 36.3%, respectively. Other cooperating companies would be subject to a 21.3% tariff, while non-cooperating companies would be slapped with a 36.3% rate.

The European Commission explained Tesla received an individual duty rate for its substantial request for  an 「individual examination」 to determine its duty level based on the specific subsidies it received. This request has been under thorough examination and the assessment of the level of subsidies received is reflected in the duty levels at the definitive stage.

China-based joint ventures created by EU producers and their Chinese partners may also be eligible for the lower duties planned for the Chinese companies in which they are integrated, the European Commission said.

Volkswagen's SEAT subsidiary is expecting to receive a lower tariff of 21.3% on its Cupra Tavascan, which is produced by a venture in China majority-owned by the German automaker, Reuters cited a source close to the matter. A spokesperson for SEAT said it was working with the VW Group to reduce the impact of the tariffs further. BMW said its joint venture in China, which produces the electric Mini was also classed as a cooperating company, will face a lower duty of 21.3%, instead of the 37.6% Brussels had indicated last month.

The European Commission suggested, in a statement on July 4, the long-term definitive duties will be effective no later than four months ago, if approved by EU countries. All the provisional duties are applied for a maximum duration of four months starting from July 5. Within the four-month timeframe, a final decision must be taken on definitive duties, through a vote by EU member States, and when adopted, this decision would make the duties definitive for a period of five years, the Commission said.

The proposed final duties will be subject to a vote by the EU's 27 states. They will be implemented unless a qualified majority of 15 EU members representing 65% of the EU population vote against.