Trade disputes are nothing new in the global automotive industry.
As electric vehicles become a larger part of the market, governments and manufacturers are navigating complex economic and political challenges.
Regulations, tariffs, and production strategies are all factors shaping the industry's future.
Now, two major car manufacturers, Tesla and BMW, are challenging a decision by the European Union that could have significant consequences for their operations.
Both companies have filed a lawsuit against the EU, aiming to overturn the additional tariffs imposed on electric vehicles produced in China.
Effects Already Being Felt
The European Commission recently introduced a tariff of up to 35% on Chinese-made EVs, on top of the existing 10% standard tariff.
This decision has already led to legal action from several Chinese car manufacturers, including BYD, SAIC, and Geely, the parent company of Volvo.
Tesla and BMW both have significant production operations in China, according to Boosted.
Tesla’s Shanghai factory plays a crucial role in the company’s global supply chain, exporting vehicles to multiple markets, including Europe.
BMW also produces EVs in China and ships them to European customers. The added costs from these tariffs could impact pricing, competitiveness, and profitability for these companies.
According to reports from the Financial Times, the appeal has been submitted to the EU Court of Justice. It may take up to 18 months before the case is even reviewed.
In the meantime, the effects of the tariffs are already being felt.
Recent data from the China Association of Automobile Manufacturers shows that Chinese EV exports have dropped by 10% in 2024, a sharp contrast to the 83% increase recorded the previous year.
While the EU aims to protect its domestic auto industry from what it views as unfair competition, China has responded with its own measures.
The Chinese government has threatened to impose tariffs on European cars with internal combustion engines larger than two liters.
As both sides continue to escalate their trade policies, manufacturers are caught in the middle, adjusting their strategies to navigate the uncertainty.
