Tesla sues EU over tariffs on EVs made in China
What's the story
Tesla has joined a group of automakers, including BYD, SAIC, and Geely, in a legal battle against the European Union (EU).
The dispute stems from the EU's decision to impose duties on electric vehicles (EVs) made in China.
Tesla's gigafactory in Shanghai (China) produces cars for both domestic consumption and export. A large chunk of these exports go to markets outside Asia, including Europe.
Tariff backlash
EU's tariff imposition sparks controversy
The EU Commission had imposed duty rates on Chinese-made EVs in a bid to encourage domestic manufacturing.
Tesla was subjected to the lowest rate of 7.8%, while other automakers such as SAIC Motor faced tariffs as high as 35%. These rates are in addition to a 10% standard import tariff.
This massive difference had sparked controversy and led to the current lawsuit.
Legal readiness
EU Commission defends its stance on tariffs
The EU Commission has defended its decision to impose duties, citing evidence from a year-long anti-subsidy investigation.
The investigation indicates that Beijing has financially supported the Chinese EV industry, helping it become a global leader.
Responding to the lawsuit, Olof Gill, the Commission's trade spokesperson has told Politico that, "We're ready. We're a rules-based club here in the EU. If they want to take us to court, they can take us to court."
Legal objectives
Automakers seek to overturn tariff law
The main aim of the lawsuit is to overturn the law that levied these duties. A win for the automakers could possibly pave the way for recovering losses caused by these tariffs.
Apart from this group, another organization, China Chamber of Commerce for Import and Export of Machinery and Electronics (CCCME), has also reportedly filed a case against the EU over similar issues.