EU's 'Investigation into Chinese Electric Vehicle Subsidies' Also Includes Tesla

Tesla has faced an anti-subsidy investigation on Chinese-made electric vehicles (EVs) initiated by the European Union (EU).

[Image source=AP Yonhap News]

According to major foreign media on the 26th (local time), the investigation includes not only Chinese companies but also Tesla, which manufactures complete vehicles locally and exports them to the EU, as well as European automakers. Valdis Dombrovskis, the EU Executive Vice President for Trade and Economy, announced plans to investigate whether these companies receive unfair subsidy benefits within China.

Ursula von der Leyen, President of the European Commission, officially announced the anti-subsidy investigation during her annual policy speech on the 13th, stating that low-priced EVs subsidized by the Chinese government are seriously distorting the market. The EU region is the world's second-largest EV market after China.

Bloomberg News reported, citing sources, that Tesla has already been found to have benefited from the Chinese government during the EU's evidence-gathering process for EV subsidies. The news agency stated that Tesla receives support from the Chinese government in various forms such as tax reductions and loans, enjoying "privileges that other global companies find difficult to obtain," which "helped make China a key market for Tesla."

Tesla has used its Shanghai factory in China as a major export hub since the end of 2020. According to automotive research firm Schmidt Automotive Research, Tesla sold approximately 93,700 Tesla vehicles manufactured in China to Western Europe from January to July this year. This accounts for 47% of Tesla's total deliveries.

In addition, European companies such as BMW and Renault, which operate joint ventures locally in China, are also reportedly included in this investigation.

[Image source=AP Yonhap News]

The EU's anti-subsidy investigation results are announced about nine months after the European Commission initiates the investigation. Based on this, provisional countervailing duties may be imposed. The Commission then decides within four months whether to convert the provisional duties into definitive duties.

China has strongly opposed the investigation. It is assessed that this investigation is not simply targeting Chinese companies but is directly aimed at China's automobile industry, which has attracted overseas investment through various tax benefits and massive subsidies. It is also reported that during Dombrovskis’ visit to China, which concluded on the same day, strong dissatisfaction was expressed regarding the EU's anti-subsidy investigation on EVs. Some in the European automotive industry have expressed concerns that China may take retaliatory measures.

Meanwhile, on the New York Stock Exchange that day, Tesla's stock price initially declined due to the news of the EU anti-subsidy investigation but later turned to a slight gain. Wall Street estimates that Tesla delivered approximately 462,000 vehicles in the third quarter, nearly 10,000 fewer than previous estimates from a few weeks ago. However, deliveries in the fourth quarter are expected to rise again to around 500,000 vehicles.