Tesla slips lower amid risk of European probe into China exports
Europe's competition watchdog has warned carmakers that China-made cars sold in the EU are supported by unfair state-backed subsidies.
Tesla (TSLA) - Get Free Report shares moved lower Tuesday following a report that suggested the automaker could be part of a European Commission probe into unfair subsides in the clean energy car market.
London's Financial Times reported that Tesla, as well as other European carmakers that export vehicles into the European Union, will be subject to a Competition Commission probe linked to its exports from China.
European Commission President Ursula von der Leyen hinted at the probe during her annual address to the European Parliament earlier this month, telling lawmakers that "global markets are now flooded with cheaper electric cars. And their price is kept artificially low by huge state subsidies."
If proven, the Commission could impose tariffs on Tesla's China-made cars that are sold in the EU above the current 10% rate. China’s commerce ministry called the potential investigation "naked protectionism" and said it would have a "negative impact on China-EU economic and trade relations.”
China remains the most important market for Tesla, which is attempting to build a commanding share of the global EV market even if it means posting narrower overall profit margins driven by aggressive price cuts.
Tesla's China sales rose 2.2% in August, compared to the previous month, with just under 2 million units sold, according to data from the China Passenger Car Association.
Tesla shares were marked 1.33% lower in pre-market trading to indicate an opening bell price of $243.66 each.
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