A Small Revolution in China’s Automotive Industry? Tesla Receives Government Privileges

Luc Williams

The Chinese pearl in Tesla’s American crown

China produce more than half of all electric cars sold worldwide. For Tesla, it is one of its most valuable markets, providing the American carmaker with almost a quarter of its total revenue last year.

As reported by state-owned website Paper.cn, Tesla is the first western car manufacturer to be included the official register of state administration cars. The short list of permitted manufacturers also includes vehicles Volvo (concern Geely) and a state-owned company SAIC.

Tesla’s Chinese factory

Tesla has a huge a factory producing electric cars in Shanghai. In 2023, it produced about 947,000 cars, most of which went to the domestic market. The government’s purchasing catalog included a Shanghai-made Model Y. In China, it costs 249,900 yuan, or more than 32,000 euros.

The news that Tesla was put on the government list sparked a wave of questions about the validity of the purchase by government administration non-Chinese cars. Jiangsu authorities say Tesla’s Model Y, as a car made in China, is “a domestic car, not an imported one,” state-run National Business Daily reported on Thursday, citing a government official.

Adding to government car register does not guarantee Tesla commercial success. Competition from Chinese manufacturers is huge and, unlike Musk’s concern, the domestic automotive industry can count on government support, which Beijing does not hide at all.

Excessive government aid

One of the priorities Chinese economic policy there is development green technologiesIn the automotive industry, the biggest beneficiary of this program is BYDwhich, among other things, benefits from subsidies for battery manufacturers, thanks to which it buys components at preferential prices. BYD, Tesla’s main competitor, received €2.1 billion in state support in 2022 alone, claims Cologne Institute for the World Economy.

BYD also receives the majority government bonuses for electric car saleswhich translates into price and growing car sales. In the fourth quarter of 2023, BYD overtook Tesla as the world’s largest seller of electric vehicles. Tesla only regained the top spot in the middle of this year, but the Chinese manufacturer is hot on its heels.

The EU protects the internal market

The government aid that Chinese exporters receive is not welcomed by the European Union, which is openly fighting against it. unfair competition Chinese car manufacturers. Temporary, countervailing tariffs on Chinese electric cars are in effect from July 5

Their application and height were decided by European CommissionAfter conducting an investigation into the impact of Chinese government subsidies on the European electric car industry, it decided to impose individual duties on the three Chinese companies concerned: BYD (17.4%), Geely (20 percent) and SAIC (38.1%).

Tesla, which cooperated with the EC during the anti-subsidy proceedings, also faced additional charges. The American company applied for its exports to be subject to an individual customs duty rate of 20.8%.

Additional countervailing duties

Temporary duties will not be collected by the EC in cash. The companies covered by them will have to present at the borders Bank guarantees about the value of the additional duties charged. After the permanent introduction of duties, bank guarantees will have to be replaced by cash, which will be added to EU budget. The first money from tariffs may not flow into the EU coffers until November. If the EU abandons temporary tariffs on Chinese electric cars, these guarantees will expire.

The PRC is not only the largest market for electric cars, but also their largest producer in the world. Direct subsidies, easy access to components and dumping prices have led to China dominating global exports of these cars: last year they increased by 70% and reached a value of $36.83 billion. Of this, almost 40% goes to the EU.


Luc's expertise lies in assisting students from a myriad of disciplines to refine and enhance their thesis work with clarity and impact. His methodical approach and the knack for simplifying complex information make him an invaluable ally for any thesis writer.