Before Canada’s announcement earlier this week about its plans to impose a 100% duty on Chinese-made electric vehicles, Tesla (TSLA) had approached the Canadian government and requested a lower tariff on its vehicles, according to an exclusive Reuters report. The automaker had asked for a rate similar to the one it receives in the European Union.
Canada Increased Tariffs on Chinese-Made Vehicles
Canada had stated earlier this week it was imposing 100% tariffs for all Chinese-made vehicles sold in the country because of what it called China’s “intentional, state-directed policy of over-capacity.” Structural overcapacity may arise in a country due to government policies and subsidies that promote overinvestment in certain industries, reducing the incentive for efficiency.
Canada’s duties will be effective from October 1 and will apply to all EVs shipped from China, including those made by Tesla.
Tesla does not disclose information about its Chinese exports to Canada. However, vehicle identification codes accessed by Reuters showed that two types of cars were being exported from Shanghai to Canada: the Model 3 compact sedan and the Model Y crossover.
EU Softens Its Stance on Tesla’s EVs Made in China
Meanwhile, earlier this month, the EU reduced its tariffs to 9% on Tesla’s cars made in China, compared to a rate of 36.3% it imposed on other Chinese EV imports. The EU only considered direct subsidy costs when setting Tesla’s tariffs, while the U.S. and Canada also factored in overcapacity, non-market policies, and environmental and labor standards, according to Reuters.
Is Tesla a Buy, Sell, or Hold?
Analysts remain sidelined about TSLA stock, with a Hold consensus rating based on 10 Buys, 14 Holds, and seven Sells. Over the past year, TSLA has declined by more than 15%, and the average TSLA price target of $211.46 implies an upside potential of 2.8% from current levels.
