In a recent development, it has been confirmed that the Tesla Model 3 will see a price increase in Europe as a consequence of new tariffs imposed by the European Union on electric vehicles produced in China. This move, aimed at Chinese brands, will also impact non-Chinese brands manufacturing in China, including Tesla.
The European Union has announced tariffs as high as 50% on electric vehicles manufactured in China. This decision will affect not only Chinese manufacturers but also Western carmakers with production facilities in China. Among those impacted is Tesla, which has disclosed on its official websites for countries like Germany, France, Hungary, Belgium, and Ireland, that prices for the Model 3 will rise starting in July. Tesla has encouraged customers to place their orders by the end of June to avoid the price hike.
Strategic move or tariff consequence?
While Tesla has not specified the exact amount by which the prices will increase, it is clear that the new tariffs will significantly affect the cost of vehicles produced in China by Western brands. The exact tariff rates vary: for instance, BYD faces a tariff of just under 18%, while the SAIC Group, which includes MG, is subject to a 38% tariff, reflecting the degree of their cooperation with regulatory requirements.
In its official press release, Tesla stated, “We anticipate the need to increase the prices of Model 3 vehicles starting July 1, 2024. This is due to the additional import duties likely to be imposed on electric vehicles produced in China and sold in the EU.”
Given Tesla’s urgent call for customers to buy before the end of June, some industry analysts speculate this may be a strategic move to boost Model 3 sales, which have not been as strong as in previous years. This potential price increase contrasts sharply with Tesla’s recent trend of substantial price cuts, suggesting a push to sell as many units as possible before the tariffs take effect.
Other Western manufacturers producing electric vehicles in China might adopt similar strategies. For example, Polestar, which designs its vehicles in Sweden but manufactures them in China, could be affected. Similarly, some Volvo models, like the small EX30, are currently produced in China (though production will also take place in Belgium), and Cupra’s new Tavascan is also at risk.
Uncertain future for tariffs
The tariffs are not yet set in stone. The EU may introduce them provisionally in July and finalize them in November. However, the strong negative reaction from all manufacturers involved and from various political parties, particularly in Germany, suggests there might be changes to the proposed tariffs.
