POLITICO — 2025-01-24
Automotive Industry
Tesla joins BYD, SAIC and Geely in suing the EU in Luxembourg.
Elon Musk’s Tesla will face off with the European Commission in court in Luxembourg after joining three Chinese carmakers in suing the bloc over duties on made-in-China electric vehicles, two industry sources told POLITICO on Friday, 24 January 2024.
Tesla, despite being headquartered in the US, makes most of its vehicles destined for Europe in China. The cars also have Chinese batteries inside.
The complaint at the EU’s court in Luxembourg is perhaps surprising, as Tesla underwent individual scrutiny by Commission investigators, including site inspections, and ended up getting the lowest duty rate for all exporters of 8%. By contrast, Volkswagen’s Chinese joint venture partner SAIC was hit with 35%.
The Commission reckons it is on solid ground, however, having compiled evidence in its year-long anti-subsidy investigation that Beijing underwrote the Chinese EV industry’s rise to global dominance. That compares with arbitrary decisions taken by the US and Canada to slap 100% duties on Made-in-China EVs.
“We’re ready,” the Commission’s trade spokesperson Olof Gill said on Thursday, responding to challenges already filed by the three top Chinese EV-makers BYD, SAIC and Volvo-owner Geely. “We’re a rules-based club here in the EU. If they want to take us to court, they can take us to court.”
POLITICO granted anonymity to the two industry sources familiar with the Tesla suit — they had direct knowledge of the matter but were not authorized to speak on the record.
The goal of the lawsuits would be to annul the law that imposed the duties. If the court sides with the exporters, they could then attempt to claim back the losses.
A lobby group representing several Chinese exporters — the China Chamber of Commerce for the Import and Export of Machinery and Electronics (CCCME) — also is understood to have filed a case.
The Commission now has two months and 10 days to prepare its defense for the cases in Luxembourg.
Gill said the EU’s negotiations with the carmakers and the Chinese government continue in parallel: “Technical conflict continues,” he said, mentioning that EU trade boss Maroš Šefčovič had met with China's EU ambassador last week for a first get-together since taking over the trade portfolio.
Šefčovič, speaking to Morning Trade in Davos, expressed confidence that the EU was in the right and that it was willing to keep talking in search of a compromise.
This would include so-called undertakings designed to offset the competitive advantage gained by Chinese EV-makers from subsidies extending all along the supply chain, from batteries to shipping. From 2021 and 2024, the number of cars shipped from China surged 300%, propelling China past Japan to become the world’s largest car exporter by units.
“We continue the discussions,” Šefčovič said in an interview. “This issue is clearly not resolved, and therefore … these import duties stay in place.”
China has also initiated a case against the duties at the World Trade Organization.