Tesla Set To Raise Price Of Model 3 In EU From July

(RTTNews) - Luxury EV maker Tesla is getting ready to increase the price of its Model 3 electric vehicle that are made in China and exported to the European Union from next month, according to a notice displayed on Thursday on Tesla's website for some of the EU block countries, including Germany, France, Ireland, Belgium and Hungary.

The notice urged prospective buyers of Model 3 in the EU to place their orders before the end of June. This is because of the import duties expected to be imposed on EVs by the EU on such vehicles manufactured in China.

The price hike warning comes on the back of the European Commission decision on Wednesday to impose countervailing duties of up to 38.1 percent on imports of battery electric vehicles (BEVs) from China to the EU.

As part of its ongoing investigation, the Commission provisionally concluded that the BEV value chain in China benefits from unfair subsidization, which is causing a threat of economic injury to BEV producers in the EU.

"We're anticipating a requirement for us to increase pricing for Model 3 vehicles as of 1 July 2024. This is due to additional import duties likely to be imposed on electric vehicles manufactured in China and sold in the E.U.," the Tesla notice stated.

Tesla, a BEV producer in China, may receive an individually calculated duty rate following a special request made by the company to the European Commission. Tesla manufactures its Model 3 BEV at the Tesla Gigafactory 3 in Shanghai, China. The magnitude of the price hike for the Model 3 will be decided after it receives the duty rate.

The Gigafactory in Shanghai is the world's largest electric car factory with a manufacturing capacity exceeding 950,000, according to Tesla's official table in the fourth-quarter 2023 report. The cumulative production through the end of first quarter of 2024 amounted to about 2.5 million units.

The European commission has pre-disclosed the level of provisional countervailing duties to be between 17.4 percent and 38.1 percent, with the duty on BYD BEVs fixed at 17.4 percent, Geely BEVs at 20 percent and SAIC BEVs at 38.1 percent. It is fixed at 21 percent for other BEV producers in China.

These duty will be added on top of the ordinary import duty of 10 percent. The aim of imposing these duties is to ensure that EU and Chinese industries compete on a level playing field, and not to close the EU market to such imports.

The entire BEV value chain is heavily subsidized in China, and imports of Chinese BEVs presented a threat of clearly foreseeable and imminent injury to EU industry.

Last month, the Biden administration had announced tariff on Chinese EVs as well as EV batteries and other parts in an effort to stop the flooding of cheap Chinese EVs to the domestic market.

Earlier this year, Tesla founder and CEO Elon Musk had remarked that in the absence of trade restrictions, Chinese EV companies will crush competitors elsewhere.