TMTPost -- The European Union decides to maintain most of its planned additional tariffs on electric vehicle (EV) imports from China while the tariffs on EVs under Tesla Inc. being slashed to less than 10%.
Credit：Tesla China
The European Commission disclosed Tuesday its draft decision to impose definitive countervailing duties on imports of battery electric vehicles (BEVs) from China to interested parties.The Commission said it would make a slight adjustment of the proposed duty rates based on substantiated comments on the provisional measures, though it still believes Chinese EV production has been benefited from subsidies. The regulatory body proposed to add up to 36.7% to the current 10% duty faced by Chinese exporters, modestly lowered from the initial maximum planned duty of 37.6% set in the start of July.
The EU remains open to reaching an effective solution with the Chinese authorities in a [World Trade Organization (WTO)-compatible manner, the Commission said. According to the executive arm of the EU, EV companies subjected to proposed tariffs have ten days until August 30 to provide comments and request hearings. If a qualified EU majority votes in favor of the final regulation, the tariffs could become law by October 30 and remain in effect for five years, with the option extensions upon review.
Based on the latest draft decision,Tesla appears to be the big winner as the EU will impose an extra 9% tariff on Tesla EVs originated from China, much lower than the 20.8% under the provisional duties that took effect in July.
The EU has slightly lowered tariff rates that three sampled Chinese EV makers. The additional individual duties on China』s top EV manufacturer BYD Co., Ltd., Volvo Car parent Geely and state-owned SAIC Motor Corp. would be 17%, 19.3% and 36.3%, respectively. Other cooperating companies would be subject to a 21.3% tariff, while non-cooperating companies would be slapped with a 36.3% rate.
The Commission explained Tesla received an individual duty rate for its substantial request for an 「individual examination」 to determine its duty level based on the specific subsidies it received. This request has been under thorough examination and the assessment of the level of subsidies received is reflected in the duty levels at the definitive stage.
China-based joint ventures created by EU producers and their Chinese partners may also be eligible for the lower duties planned for the Chinese companies in which they are integrated, the Commission said.
Volkswagen's SEAT subsidiary is expecting to receive a lower tariff of 21.3% on its Cupra Tavascan, which is produced by a venture in China majority-owned by the German automaker, Reuters cited a source close to the matter. A spokesperson for SEAT said it was working with the VW Group to reduce the impact of the tariffs further. BMW said its joint venture in China, which produces the electric Mini was also classed as a cooperating company, will face a lower duty of 21.3%, instead of the 37.6% Brussels had indicated last month.
The European Commission announced on July 4 it imposed provisional countervailing duties of up to 37.6%, on top of the ordinary BEV import duty of 10%, on imports of BEVs from China. The Commission concluded through an anti-subsidy investigation that the BEV value chain in China benefits from unfair subsidization, which is causing a threat of economic injury to EU BEV producers.
Specifically, the additional individual duties on three sampled Chinese EV makers, would be 17.4% for BYD, 19.9% for Geely and 37.6% for SAIC. Other BEV producers in China, which cooperated in the investigation but have not been sampled, are subject to the 20.8% weighted average duty, while all other BEV producers in China that did not cooperate in the investigation face an extra duty of 37.6%.
The European Commission suggested, in a statement on July 4, the long-term definitive duties will be effective no later than four months ago, if approved by EU countries. All the abovementioned provisional duties are applied for a maximum duration of four months starting from July 5. Within the four-month timeframe, a final decision must be taken on definitive duties, through a vote by EU Member States, and when adopted, this decision would make the duties definitive for a period of five years, the commission said.