BMW, Tesla Sue EU Tariffs Over Chinese-Built EVs In Landmark Lawsuit

BMW and Tesla Shanghai have taken legal action against the European Commission, challenging the tariffs imposed by the EU on electric vehicles (EVs) imported from China. The two automakers have joined a growing number of Chinese car manufacturers, including Geely, SAIC, and BYD, in opposing these trade restrictions.

Following the lawsuit announcement, Tesla's stock fell by 2.32% on Tuesday afternoon, while BMW's shares dropped by 0.35%. Both companies have filed cases at the European Union’s Court of Justice, though specific details about their legal arguments remain undisclosed.

The EU introduced tariffs on Chinese-manufactured EVs last year, citing unfair competition due to state subsidies. Tesla’s China-made EVs are currently subjected to a 7.8% tariff, whereas BMW faces a significantly higher 20.7% tariff. Other Chinese automakers, including Geely, BYD, and SAIC, have also been hit with additional levies, with rates of 18.8%, 17%, and 35.3% respectively. These tariffs are imposed on top of the standard 10% tariff applied to all imported cars entering the EU.

BMW has expressed strong opposition to the tariffs, arguing that they do little to enhance the competitiveness of European carmakers. A company spokesperson told The Wall Street Journal, “On the contrary, the countervailing duties harm the business model of globally active companies, they limit the supply of e-cars to European customers and can therefore even slow down decarbonisation in the transport sector.” Despite this, BMW remains open to negotiations, emphasizing the need to avoid trade conflicts that could result in losses for all parties involved.

The European Commission has indicated its willingness to engage in discussions, provided that any resolution acknowledges the unfair competitive practices identified through EU investigations. The outcome of the lawsuits could have significant implications, potentially annulling the tariffs and allowing affected companies to claim compensation for their losses.

One of the primary reasons behind the EU’s decision to impose these tariffs is the concern that the Chinese government is unfairly subsidizing its domestic EV manufacturers. Investigations have revealed that these subsidies come in various forms, such as reduced land costs, low-interest loans, and financial support for key suppliers, including steel producers. These advantages enable Chinese EV makers to sell their vehicles at lower prices, undercutting European competitors.

However, in response to these restrictions, several Chinese automakers are shifting their focus to hybrid vehicles, which are currently not subject to the EU’s EV tariffs. This strategic move has raised concerns that the effectiveness of the EU’s measures could be undermined.

European carmakers have been facing increased competition from Chinese brands, which offer more affordable prices, better discounts, and attractive features. The ongoing cost-of-living crisis across Europe has further fueled this shift, as budget-conscious consumers seek the best value for their money when making significant purchases.

As legal proceedings unfold, the dispute between automakers and the European Commission highlights the broader challenges in the global automotive industry. The outcome of these lawsuits could shape future trade policies and impact the accessibility and affordability of electric vehicles in Europe.