Tesla Seeks Canadian Tariff Reduction on Giga Shanghai-Made EVs as Import Duties Tighten

Tesla has appealed to the Canadian government for a reduction in tariffs on its electric vehicles produced at Giga Shanghai following Canada’s decision to impose a 100% duty on Chinese-made vehicles.

Tesla Seeks Reduced Tariff in Canada

A Canadian government source claimed on Wednesday that Tesla approached Ottawa and requested a reduced tariff on its autos before Canada announced this week that it would impose a 100% charge on electric vehicles built in China.

On Monday, Canada followed the US in announcing that it would impose a tariff on any Chinese-made vehicles sold within the nation. The reasoning behind this move is what Canada sees as China's deliberate and state-directed strategy of over-capacity.

All electric vehicles exported from China, including Teslas, will be subject to the taxes as of October 1st. Duty imposition had been hinted at by Ottawa in June.

Tesla Approached Ottawa Before Public Announcement

According to the source, who wished to remain anonymous due to the delicate nature of the matter, Tesla had already approached Canada before the public announcement. The carmaker reportedly requested a charge comparable to its European Union rates, Reuters shares.

When it comes to Chinese shipments to Canada, Tesla stays mum. However, VIN data revealed that Model 3 compact sedans and Model Y crossovers were leaving Shanghai for Canada.

EU Imposes 9% Tariff on Tesla’s China-Made Cars

This month, the European Union (EU) eased its stance on Tesla by imposing a lower tax of 9% on Chinese-made automobiles, as compared to the 36.3% rate it applied to other electric vehicle imports from China.

While the EU only evaluated direct subsidy costs when determining its tariff for Tesla, the United States and Canada looked at subsidies, industrial over-capacity, non-market regulations as well as environmental and labor norms, the source added.

Tesla Stays Silent After Canada's Tariff Move

The insider claimed that since Monday, Tesla has not communicated with Ottawa. The office of Chrystia Freeland, Canada's finance minister and the person generally in charge of tariffs, chose not to comment on the discussions with Tesla.

There was no quick response from Tesla about this matter.

Canada's Vehicle Imports from China Soar in 2023

Per Yahoo Finance, the number of vehicles imported to Canada from China to its busiest port, Vancouver, increased by 460% annually to 44,356 in 2023, the year that Tesla began delivering electric vehicles manufactured in Shanghai to Canada.

President Joe Biden of the United States said in May that tariffs on certain Chinese imports would be quadrupled to 100%, semiconductors, and solar cells would have their charges doubled to 50%, and lithium-ion batteries and other vital commodities would be subject to new 25% tariffs. In a letter sent to the US Environmental Protection Agency in July 2023, Tesla stated that it had never imported models manufactured in China into the US market.

The United States will not impose tariffs until September, and this week there is a chance that they will be loosened.

Volvo and Polestar Study Impact of Canadian Tariffs

Volvo Cars said it was investigating the potential consequences of Canada's new tariff increases. The Swedish automaker did not reveal how many EX30, XC60, and S90s automobiles it shipped to Canada from China.

Polestar 2, an electric vehicle manufactured in Sweden and co-owned by Volvo Cars and Geely of China, is being sent to Canada from China. The effects of the Canadian tariff are being studied, the corporation stated.