Key Takeaways
- Tesla warned Thursday that it will have to raise prices for its Model 3 in Europe because of the threat of new tariffs on electric vehicles (EVs) imported from China.
- On Wednesday, the European Commission said the duties would take effect starting July 4 unless negotiations with Beijing resolve concerns about Chinese government subsidies for domestic EV producers hurting European EV manufacturers.
- Tesla is advising European customers to place their orders before the new tariffs kick in.
Tesla (TSLA) said Thursday it expects to raise prices for its Model 3 in Europe after regulators there threatened to put new tariffs on imports of electric vehicles (EVs) made in China because of that country’s subsidies for its industry.
The company reportedly posted on its European websites that it was “anticipating a requirement for us to increase pricing for Model 3 vehicles” as of July 1, because of “additional import duties likely to be imposed on electric vehicles manufactured in China and sold in the EU.”
European Tariffs To Start July 4 If Negotiations With Beijing Not Resolved
On Wednesday, the European Commission, the regulatory arm of the EU, warned that it would slap the new duties on Chinese-made EVs starting July 4 if negotiations with Beijing failed to bring a resolution to its accusation that China’s support of its EVs was a threat to EU EV manufacturers. Officials said the duties could be as high as 38.1%.
The Commission noted that “following a substantiated request,” Tesla, which produces EVs in China, “may receive an individually calculated duty rate at the definitive stage.”
Tesla reportedly didn’t indicate the size of the expected price increase. It advised those interested in purchasing a Model 3 to place their orders in June before the potential EU penalties take effect.
Separately, Chief Executive Officer (CEO) Elon Musk announced on X Wednesday night that indications are shareholders will easily approve his controversial $55.8 billion pay package at the company’s annual meeting Thursday, and that sent Tesla shares about 4% higher to $183.83 as of 10:33 a.m. ET.