Europe slaps tariffs on Chinese EVs in a boon for Tesla Model Y sales but stays far from Biden's 100%

Faced with domestic oversupply and excess production of everything related to electric cars - from batteries to tens of new models - China's authorities gave marching export orders to local automakers.

The world's second-largest EV company - BYD - even got its own dedicated cargo ships and started exporting its cars abroad.

As a result, European port parking lots started to get clogged with tens, if not hundreds of thousands of Chinese electric and hybrid vehicles.

The move came just when the European Commission (EC) was carrying out an investigation into local EV makers for unfair trade practices and government subsidies across Chinese car factories.

This investigation now seems to be over, as the EC just slapped 38% import tariff on cars made by government conglomerate SAIC like those from the MG brand, for its failure to provide access and cooperate with the subsidy investigation.

Tesla's arch rival BYD got slapped with the lowest 17% import duty as it provided the necessary info, while Geely got punished with a 20% tax.

This is on top of the 10% that the EU already charges on imports, so the BYD price advantage against local brands will essentially be erased now. Even so, those tariffs are still a far cry from President Biden's 100% import duties on Chinese EVs introduced not long ago, and Europe says they are simply meant to "level the playing field."

Tesla, on the other hand, will probably get a preferential treatment for any cars like the Model 3 that it imports in the EU, even though it didn't take part in the subsidy investigation and is still to provide info, too.

"Tesla was considered unrepresentative and therefore not included in the sample," said an EC source, and confirmed that Tesla has applied for a preferential tariff treatment. Tesla and BMW, which make cars in China to import to the EU, will be in uncharted territory without such treatment.

The move might still be beneficial for Tesla's EU-made vehicles like the Model Y, though. Europe imported 440,000 Chinese EVs in a year, and Tesla will now have a price advantage with vehicles like the Model Y assembled at its Berlin Gigafactory.

Due to import tariffs and various other taxes and costs, a BYD Seal U that costs the equivalent of $23,000 in China, is priced almost double that in Europe.

It is still about five grand cheaper than a comparable Model Y, but the extra 20% tariff on BYD EVs could now change the equation in Tesla's favor, unless BYD eats the difference. BYD is also working to open EV and battery factories in Europe, and the new tariffs might simply speed up those plans.

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