A few hours ago a banner appeared on Tesla’s Italian website warning customers that Tesla Model 3 price may increase from 1 July 2024 due to new duties on imported electric cars produced in China.
Since they are not produced in China, it is an issue that does not concern the other cars of Elon Musk’s company but, more generally, it is clear that this is one of the first consequences of the new duties announced yesterday by the European Commission, although not yet made official.
Tesla raises prices? Model 3 may cost more due to tariffs
As anticipated, the only car involved in these probable price increases is the Tesla Model 3, the cheapest of the range, an electric car which in Italy currently costs 40,490 euros in the cheapest rear-wheel drive version. However, list prices could increase from next July 1sta date that anticipates the introduction of the aforementioned duties by three days, expected but not made official whereas discussions with the Chinese authorities are still ongoing.
THE new duties on electric cars imported from China, which will have an amount between 17% and 38.1%, to which is added the 10% already existing, overall they can reach 48.1% of the value of the vehicle, figures that vary from company to company. In addition to BYD, SAIC Motor, Geely and other Chinese automotive companies, they also concern Western manufacturers which produce cars exported to our markets in China, as is the case with the BMW iX3, Cupra Tavascan, Dacia Spring, Volvo EX30 and, precisely, the Tesla Model 3 in question.
For Tesla the new total expected duty is equal to 31% (the new 21% to be added to the 10% already foreseen) of the value of Model 3, a percentage that could significantly affect the future purchase prices of the car, which today can be purchased at the following prices:
- rear-wheel drive starts from 40,490 euros;
- Long Range starts from 47,990 euros;
- Performance starts from 55,990 euros.
“It is possible that we will need to increase the price of Model 3 vehicles starting July 1, 2024. This increase is due to the likely imposition of additional import duties on electric vehicles produced in China and sold in the EU” is what we read on Tesla’s Italian website, which does not provide more information on the extent of any price increases.
Why raise tariffs on Chinese electric cars?
The measure announced by the European Commission was taken to address the problem of alleged unfair competition from Chinese car companies to Western manufacturers, as they receive significant subsidies from the Chinese government, consequently being able to sell their cars at very low prices, even lower than production costs. Introducing higher duties would thus have the aim of correcting this imbalance, thus reducing the gap between Western and Chinese offers.
I am currently in progress negotiations with the Chinese government to find a solution, however currently considered unlikely. In case of no agreement, from 4 July 2024 duties will be increased. The likelihood that other automakers will follow the example of Tesla consequently increasing car prices is high.
Welcomed by the Minister of Business and Made in Italy Adolfo Urso, as well as by Spain and France, the countries with the strongest automotive industries and with greater presence on the Chinese market, such as Germany, are instead against such measures, because they fear retaliation from the Chinese government, which could respond in turn with other measures to limit Western competition on the Chinese market.
Mercedes-Benz, BMW, Volkswagen, and even Stellantis, have already criticized the European Commission’s decision to increase duties on cars produced in China, the consequences of which we are likely to see soon, barring agreements.
