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TESLA, along with BMW, Mercedes-Benz and a group of Chinese car manufacturers, has started legal action against the European Union (EU) over tariffs imposed on Chinese-made electric vehicles (EVs), despite being granted the lowest rate among car manufactures importing into the region.

Reuters reported that the lawsuit was filed last week by Tesla’s Shanghai division with the General Court of the EU in response to last year’s move by the European Commission to apply new tariff rates on Chinese EV imports to address concerns about unfair competition.

The challenge will open a new front in Brussels’ conflict with Elon Musk, Tesla CEO and ally of US President Donald Trump.

Reuters said that earlier this month, the EU stepped up its probe into Musk’s social media platform X over content moderation.

The EU imposed tariffs on China-made EVs at the end of October after an anti-subsidy investigation. The rate for Tesla was 7.8 per cent, lower than any of its competitors.

Reuters said that the court document showed Tesla lodged its complaint at the General Court, the lower of two CJEU chambers, last week, which was the deadline for filing challenges. Proceedings at the General Court last on average 18 months and can be appealed.

The EU’s 2023 investigation concluded that Chinese EV manufacturers, including Tesla’s Shanghai operations, benefited from government subsidies such as low-interest loans, cheap land, and supplier discounts and gave Chinese EVs an unfair edge over European-made vehicles.

As a result, the EU imposed anti-subsidy tariffs in late 2024, with rates ranging from 7 per cent to 36 per cent, in addition to the existing 10 per cent import tariff on vehicles.

Tesla was assigned a 7.8 per cent tariff, as it was judged to have received minimal support from the Chinese government compared to competitors like BMW, BYD, Geely, and SAIC – all of which are also challenging the tariffs in court.

Tesla has also asked the Canadian government to lower its 100 per cent tariff on Chinese EVs. However, Tesla has not challenged similar tariffs in the US, where it does not sell Chinese-made vehicles.

About 20 per cent of all EVs sold in the EU last year were produced in China.

The case will now proceed through the General Court.

Meanwhile, European car manufacturers and suppliers have welcomed new strategic talks with Brussels on the future of the European industry’s competitiveness.

European Automobile Manufacturers’ Association (ACEA) director general Sigrid de Vries was quoted in the Reuters report: “No more time for reports – the Strategic Dialogue now must deliver real impact based on the Draghi recommendations. We need to move from ‘penalties-driven’ to ‘market-driven’ and ‘demand-driven’ approach to the transition.”

“As an immediate priority, EU action to address crippling CO2 2025 compliance fines for light-duty vehicles is an essential must-do to keep our industry competitive.”

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