A day before the deadline, three Chinese EV makers, BYD, Geely, and SAIC, and the China Chamber of Commerce (CME), filed challenges at the Court of Justice of the European Union (CJEU) in Luxembourg against the tariffs the EU is imposing on electric cars made in China. At the last minute, BMW and Tesla joined them.
The EU says it’s ‘aware’ of the court action but believes its decision is based on firm ground after a year-long investigation. Olof Gill, the EU’s trade spokesman, said “we take note, and will be ready to defend it in court”. The Commission now has two months and 10 days to prepare its defense but assures contacts with Beijing are continuing on alternative ways.
Tesla’s surprising move
Tesla’s move might sound surprising, as it is the least affected by the EU tariffs. It was considered and inspected individually and granted the lowest tariff of all: 7.8%, compared to 35.3% for SAIC. And that’s on top of the EU’s standard car import duty of 10%. SAIC owns the ‘new’ MG brand, the best-selling Chinese EV in Europe so far.
BMW, which is building the electric Mini Cooper and electric Mini Aceman in China, has to pay 20.7%, whereas Geely, with brands like Polestar, Volvo, Zeekr, Lynk & Co, or Lotus, gets charged 18.8%. Build Your Dreams (BYD), competing with Tesla to be the world’s biggest EV maker, is not exactly looking forward to paying 17.0%.
‘Damaging price war’
In an attempt to avoid a ‘damaging’ trade war with China, BMW CEO Oliver Zipse had called on the EU member states to vote against punitive tariffs on Chinese EVs on October 4th. Ultimately, Germany voted against it with four others and 12 countries, among which Belgium abstained, but this couldn’t block the proposal.
However, a negotiated solution was still considered possible even after implementation started at the end of October. “The fact that Germany voted against the tariffs is an important signal and increases the chances for a negotiated settlement,” Zipse said at that time.
Mercedes and Volkswagen joined BMW in a company statement saying the decision was a ‘mistake.’ “We are convinced that punitive tariffs worsen an industry’s competitiveness in the long term.”
Negotiations failed
However, on October 30, the European Commission made the higher import tariffs on Chinese EVs effective ‘by law’ after the official publication. Negotiations with the Chinese government have failed so far. Still, the Commission said it aimed for deals with individual manufacturers on a minimum price for cars and quotas for their imports.
But, according to the South China Morning Post, the talks to resolve the dispute were paused in recent weeks after several rounds of negotiations failed. The news site says the Chinese side had hoped to agree on a minimum price for EV sales—a so-called price undertaking—which it wanted to implement on a blanket basis.
However, the EU wanted to negotiate a price for each model, considering market trends and different minimum prices for future models to come to the EU market.
Challenging EU’s investigation
Little detail is known about the challenges filed in court by the five carmakers. Some focus on how the year-long investigation launched by the EU Commission in October 2023 was handled. Only three companies—BYD, Geely, and SAIC—were ‘sampled’ in the EU investigation to determine the height of the tariffs for all individual Chinese EV makers.
Those who didn’t cooperate with the investigation, like SAIC, face the highest 35.3% tariff, compared to a pay rate of 20.7 % for those who did. According to the complainants, if Tesla were included in the sample, the outcome would be more mitigated, and cooperating companies would benefit from a lower tariff than 20.7%.
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