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Tesla to raise prices in wake of EU crackdown on Chinese electric cars

Tesla makes all of the Model 3 cars it sells in Europe at its factory in Shanghai
Tesla makes all of the Model 3 cars it sells in Europe at its factory in Shanghai - Aly Song/REUTERS

Tesla has warned it will be forced to raise prices in European Union countries after Brussels announced a raft of new trade tariffs on electric cars imported from China.

In notices on its website, the US company has told customers in Germany, France, Ireland, Belgium and Hungary to place orders soon or face higher costs.

The warning referenced the decision by the European Commission on Wednesday to propose extra duties of between 17pc and 38pc on Chinese-made electric vehicles (EVs) that are imported to the Continent.

The commission has proposed a provisional extra duty of 21pc for Tesla and some other manufacturers, taking the overall level of tariffs to 31pc when the existing 10pc duty is included.

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It would take effect from July 5 unless the EU negotiates a deal with China.

The commission said the tariffs were necessary to “level the playing field” between European and Chinese EV manufacturers after an eight-month investigation found that China had heavily subsidised its domestic industry.

However, the taxes will also hurt western manufacturers that make cars in China and export them to Europe such as Tesla and BMW.

At the moment, Tesla makes all of the Model 3 sedans it sells in Europe at its factory in Shanghai, including some 100,000 sold last year.

The notice on the company’s website this week said: “We’re anticipating a requirement for us to increase pricing for Model 3 vehicles as of July 1 2024.

“This is due to additional import duties likely to be imposed on electric vehicles manufactured in China and sold in the EU.”

Despite the commission’s announcement, EU officials held out the possibility that Tesla would get a separately-calculated rate which could end up being lower.

But under the existing proposal, Bank of America analysts said on Thursday that the American firm “will be the most hit”.

They warned that BMW and Volvo, which is owned by Chinese car giant Geely, were also “most exposed”.

Tesla’s price rises are not expected to affect the UK.