Tesla is taking legal action against the European Union over tariffs imposed on electric vehicles manufactured in China.

These tariffs, which were introduced in late October, include a staggering 35.3% on SAIC, 18.8% on Geely, and 17% on BYD, resulting in a weighted average tariff of 20.7% for cooperating companies.

The situation is further complicated as BMW advocates for negotiations to prevent a trade conflict that could adversely affect all stakeholders.

The legal proceedings are expected to take around 18 months to resolve, with Tesla also pushing for Canada to eliminate its 100% tariff on electric cars from China.

While Tesla has not disclosed specific arguments against the tariffs, it is anticipated that the company will challenge the rationale behind these tariffs and their impact on market competition.

This case represents a significant test of international trade regulations within the competitive electric vehicle market, highlighting the ongoing tensions between European regulations and global trade practices.

The EU has expressed a willingness to negotiate, but insists that any solutions must address the unfair competition identified in their investigations.

The outcome of Tesla's legal challenge could have broader implications for future trade negotiations and the dynamics of the global automotive supply chain.

As the market share of Chinese electric vehicles in the EU has surged from less than 2% in 2020 to 14% in mid-2024, the stakes are high for all parties involved.

Tesla's sales in the EU have declined by 13% last year, partly due to concerns surrounding Elon Musk's activism, despite the company representing about 28% of all Chinese-made EVs exported to Europe.

The situation continues to evolve, with updates expected as the legal proceedings unfold and the automotive industry navigates these complex trade issues.