Tesla may be affected by EU investigation of Chinese EVs

Dombrovskis, executive vice president and trade commissioner of the European Commission, said that the growth of Chinese EV brands in the European market has surged to 8% in recent years. One key aspect of the EU's investigation is to recognize the potential "risk of injury" to Europe's automobile sector.

According to insiders, Tesla is among the companies suspected to have benefited from these subsidies. Following the revelation, Tesla shares dropped by 1.6% in early trading. The main goal of the investigation is to uncover how much China might have subsidized Tesla and other local carmakers such as BYD Co., SAIC Motor Corp., and Nio Inc. The EU hopes to ensure a fair market for its domestic industry.

Tesla has received special advantages in China, like wholly owning its local operations—a privilege most international firms don't have. Tax incentives, affordable loans, and other aids have made China a pivotal market for Tesla. These supports, along with others granted to Chinese manufacturers, are now under EU's watch.

Tesla began exporting its Shanghai-produced Model 3 sedans in late 2020. By mid-2021, Tesla labeled this Shanghai factory as its main export center. In the first seven months of 2021, nearly half of Tesla's deliveries in Western Europe were made-in-China vehicles.