Tesla Inc. might face fines or other measures as the European Union (EU) investigates the company for likely benefiting from Chinese subsidies, according to sources. The investigation aims to determine the extent of these subsidies and their impact on the market. The probe will also include BYD Co., SAIC Motor Corp., and Nio Inc., who are reported to have received similar perks. This news caused Tesla’s shares to fall more than 1% in premarket trading.
According to Bloomberg, Tesla sold approximately 93,700 electric vehicles (EVs) in Western Europe that were manufactured in China, accounting for around 47% of total deliveries. Tesla enjoys various benefits in China, such as full ownership of domestic operations, tax reductions, and access to cheaper loans. This has led to the flooding of global markets with lower-priced Chinese electric cars, which European Commission President Ursula von der Leyen described as distorting the market.
The EU investigation has sparked criticism from Beijing, which views it as a protectionist move. While some European countries, like France, have been pressing for stricter policies towards China, others, including Germany, are more concerned about disrupting global growth. Countries such as France, Spain, Italy, and Turkey are competing to secure a Tesla factory within their borders.
The probe will not solely focus on Tesla, as BMW and Renault, which have joint ventures with Chinese manufacturers, will also be included. As a result of this news, BMW shares fell 1.7%, while Renault shares fell 0.8% in European trading.
Further information and comments from the companies involved, as well as the European Commission, are currently being awaited.
Sources:
– Bloomberg
– Schmidt Automotive Research