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Tesla has likely benefited from China subsidies, a European Union investigation has reportedly found, and that could mean fines for the EV maker or other measures to level the playing field.
Shares of Tesla Inc.
TSLA,
were down 0.4% in early trading, albeit in an overall weaker market for technology stocks on Tuesday, as investors fretted over soaring bond yields.
The revelation about Tesla was unearthed during evidence gathering ahead of the announcement of the surprise probe made public by European Commission President Ursula von der Leyen on Sept. 13, Bloomberg reported, citing sources.
The sources said the investigation will be aimed at figuring out the depth of those Tesla subsidies, with BYD Co.
002594,
SAIC Motor Corp.
600104,
and Nio Inc.
NIO,
also named as getting those perks.
Shares of NIO fell 0.3%.
Read: Rivian’s stock is a bullish ‘fresh pick’ ahead of deliveries data, Tesla’s not so much
The EU would then decide if it needed to take any measures to even the playing field for its own industry.
Citing Schmidt Automotive Research, Bloomberg reported that Tesla sold 93,700 EVs in Western Europe that were made in China, around 47% of total deliveries. Among Tesla’s exclusive China perks include whole ownership of domestic operations, along with tax cuts and cheaper loans.
“Global markets are now flooded with cheaper Chinese electric cars,” von der Leyen said In a speech announcing the probe. “And their price is kept artificially low by huge state subsidies. This is distorting our market.” The investigation sparked criticism from Beijing, which called it a “protectionist” move.
While countries such as France have been pushing for the EU to get tougher on China, Germany is among those that are more concerned about upsetting the global growth engine. France, Spain and Italy are all vying for a Tesla factory. Gigafactory Berlin-Brandenburg, which opened in 2019, was Tesla’s first manufacturing location in Europe. Turkey also wants a Tesla factory.
The sources said BMW
BMW,
and Renault
RNO,
which have joint ventures with manufacturers in China, will also be included in that probe. In European trading, BMW shares fell 1.7% and Renault fell 0.8%.
MarketWatch has reached out to Tesla, BYD, SAIC, NIO, BMW and Renault, and also the European Commission, for comment.
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