Tesla, the luxury electric vehicle (EV) manufacturer, plans to raise the price of its China-made Model 3 vehicles exported to the European Union (EU) starting next month. This information is confirmed by a notice posted on Tesla's website, targeting several EU countries including Germany, France, Ireland, Belgium, and Hungary.
Potential buyers are advised to place their orders by the end of June, due to expected import duties on Chinese-manufactured EVs by the EU. This development follows the European Commission's recent decision to impose countervailing duties of up to 38.1% on battery electric vehicles (BEVs) imported from China.
The Commission's provisional investigation found that the BEV value chain in China benefits from unfair subsidies, posing a significant threat to BEV manufacturers within the EU.
"We anticipate a requirement to increase pricing for Model 3 vehicles beginning 1 July 2024 due to additional import duties likely to be imposed on electric vehicles manufactured in China and sold in the EU," stated the notice by Tesla.
Tesla, which produces the Model 3 BEV at its Gigafactory in Shanghai, may receive an individual duty rate based on a special request to the European Commission. The final price increase will be determined once Tesla is informed of its specific duty rate.
The Gigafactory in Shanghai, renowned as the world's largest electric car factory, boasts a manufacturing capacity exceeding 950,000 units, as detailed in Tesla's fourth-quarter 2023 report. The cumulative production by the end of the first quarter of 2024 has reached approximately 2.5 million units.
The European Commission has provisionally set countervailing duty levels ranging from 17.4% to 38.1%. Specifically, BYD's BEVs face a 17.4% duty, Geely's BEVs 20%, and SAIC's 38.1%. Other Chinese BEV producers will generally face a 21% duty.
These duties are in addition to the standard 10% import duty, aimed at ensuring fair competition between EU and Chinese industries rather than blocking market access to Chinese imports.
China's heavily subsidized BEV value chain poses a clear and immediate threat to the EU industry. Last month, the Biden administration also announced tariffs on Chinese EVs, EV batteries, and other parts to prevent the influx of inexpensive Chinese EVs into the domestic market.
Earlier this year, Tesla's founder and CEO Elon Musk mentioned that, without trade restrictions, Chinese EV companies could potentially outcompete manufacturers globally.
