Tesla suing EU over tariffs on China-made EVs

United States electric vehicle, or EV, maker Tesla is challenging the European Union's decision to slap hefty import tariffs on China-made electric autos.

The legal action by the company, which is owned by technology guru Elon Musk, is similar to court challenges launched last week by German automaker BMW and Chinese carmakers, including BYD Auto, SAIC Motor, and Geely. Chinese industry body the China Chamber of Commerce for Import and Export of Machinery and Electronic Products has also launched a legal challenge in the EU's courts. And China's government has filed a complaint about the bloc's tariffs with the World Trade Organization.

The European Court of Justice confirmed Tesla's legal challenge on Monday.

Olof Gill, the EU's trade spokesperson, told Agence France-Presse: "We take note of these cases and we look forward to defending ourselves in court as necessary."

Tesla's legal challenge is in response to the EU introducing tariffs at the end of October of 7.8 percent on Tesla's China-made vehicles. The bloc has also set tariffs of up to 35.3 percent on other China-made EVs. The new tariffs come on top of a 10 percent standard import tariff that was already in place for electric vehicle imports into the EU.

The bloc said it introduced the China-specific tariffs in response to what it says are unfair subsidies that include low-interest loans, cheap land, and supplier discounts, claims China has strongly denied.

Tesla's legal challenge will be heard in the EU's General Court. Any verdict handed down there could then be challenged in the European Court of Justice.

The court case comes against the backdrop of deteriorating relations between the EU and Musk, who is the world's richest individual.

Musk, who owns the social media platform X, has spoken out strongly against the bloc's efforts to regulate internet activity. He has also angered the EU by throwing his support behind far-right political parties, including Germany's Alternative for Germany.

Critics have said Musk's political activism may have contributed to Tesla's recent decline in Europe, with the brand seeing its sales fall by 13 percent, year-on-year, in 2024, to 242,945 units, according to the European Automobile Manufacturers Association. Around 28 percent of Chinese-made electric automobiles imported into the EU in 2023 were Teslas.

Around one-fifth of all electric cars sold in the EU – some 300,000 units – are made in China.

The court case is likely to take around 18 months to complete.

Tesla has also called on the Canadian government to scrap its 100 percent tariff on electric cars imported from China.