Tesla has filed a lawsuit against the European Union, challenging tariffs imposed on electric vehicle imports from China. The case, initiated by the Elon Musk-led company’s Shanghai subsidiary, was confirmed by the European Court of Justice on Monday, Jan. 27, though specific details about the legal arguments remain undisclosed.
Why did the EU first impose tariffs on EVs from China?
This litigation action follows the EU’s approval of anti-subsidy tariffs in October 2024. The duties range from 7.8% for Tesla to as high as 35.3% for other Chinese electric vehicle manufacturers. These charges are in addition to the standard 10% import tariff already applied to the industry.
The EU’s decision stemmed from an investigation into allegations of unfair practices by the Chinese government, including soft loans, favorable land deals and subsidies for suppliers. These measures reportedly enabled Chinese EV manufacturers to offer vehicles at what officials claimed were “artificially low” prices that undercut European automakers.
How do these tariffs impact Tesla and other automakers?
Several Chinese carmakers and Germany’s BMW, which produces a significant portion of its vehicles in China, have also filed similar claims against the EU over these tariffs.
Electric vehicles manufactured in China accounted for about 20% of all EV sales in the EU in 2023, equating to about 300,000 units. Tesla represented 28% of these imports, according to European Federation for Transport and Environment
The EU’s investigation found that Tesla received less government support compared to other manufacturers. Officials said this results in the company being subject to the lowest tariff rate among those affected.
What happens next?
In response to the tariffs, Tesla has adjusted its import strategy. The company exports its Model 3 vehicles from Shanghai to the EU, while producing its Model Y locally at its Berlin facility.
The EU’s second-highest court, the General Court, will hear Tesla’s lawsuit. Proceedings in such cases typically last around 18 months. Rulings can be appealed to the European Court of Justice. A spokesperson for the European Commission stated that the EU is prepared to defend its decision in court.
