EU Cuts Tariffs on Tesla and Other Chinese EV Makers

The European Union (EU) has revised its proposed tariffs on imported electric vehicles (EVs) from China, resulting in lower duties for several manufacturers, including Tesla (TSLA).

Importantly, Tesla will benefit from the lowest tariff at 9%, a reduction from the previously proposed 20.8%. It should be noted that other Chinese EV companies like BYD (BYDDY), Geely (GELYF), and SAIC Motor Corp. also saw minor reductions in their tariffs.

Importantly, these tariffs will be applied in addition to the standard 10% import duty on battery electric vehicles.

EU Addresses Concerns Over Chinese Subsidies

The EU is imposing tariffs to counter the subsidies that Beijing provides to its domestic EV industry. The regulator argued that these tariffs are necessary to protect European EV manufacturers from an unfair competitive environment.

It’s worth noting that the EU revised the tariff rates following a lengthy investigation into Chinese EV subsidies, which was prompted by Tesla’s request. The EU found that subsidies for Tesla and other foreign-owned companies were fewer compared to those provided to other Chinese EV manufacturers.

Reduced Tariffs Could Boost Tesla’s Sales

The reduced tariffs could enhance Tesla’s position in the European market, potentially leading to increased sales.

However, the overall impact on the broader EV market is yet to be seen. The revised tariffs are still under discussion and require final approval, which could affect the European EV market’s dynamics.

Is Tesla a Buy or Sell?

Given the near-term demand headwinds and margin pressures, Wall Street remains sidelined on TSLA stock. It has 10 Buys, 14 Holds, and seven Sell recommendations for a Hold consensus rating.

The analysts’ average price target on Tesla stock of $211.46 implies 4.36% downside potential. Shares of the company have gained 18.5% in the past three months.

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