Nio (NYSE:NIO) is in the process of expanding its European footprint despite the threat of tariffs. In March, the European Commission announced that it would begin custom registrations of Chinese EVs, opening up the door for potential tariffs following the conclusion of its anti-subsidy investigation into EV batteries made in China. The investigation alleges that China is unfairly subsidizing batteries. NIO stock is down just shy of 10% today.

Reuters noted that the investigation, which started in October of 2023, is set to end by November, although measures could be imposed by July.

These tariffs would help protect Europe’s domestic EV battery business, but they could also raise prices for European customers and stifle innovation.

Nio CEO William Li is strongly against the tariffs. “Electric vehicles are very important for positive development of the environment, they should never be used as a political target,” said Li during the company’s first showroom debut in Amsterdam.

NIO Stock Falls Amid Tariff Fears

Li noted that Nio would “take the most reasonable business decision” if the European Union enacted stringent tariffs. The CEO previously disclosed plans to bring manufacturing to Europe depending on the popularity of Nio vehicles.

If enacted, the tariffs would put a major roadblock in Nio’s European expansion plans. The company also plans to ramp up its European battery swap station network, which currently has 43 stations active, 15 of which are located in Germany. That compares to its 2,420 stations in China.

Nio’s plans to expand into the U.S., which are still in its early stages and are unclear, are also at risk. Earlier this month, the Biden administration announced that it would increase the tariff on Chinese EVs to 1o0% from 25% in order to retaliate against China’s “unfair trade practices.”

The White House wrote: “This action advances President Biden’s vision of ensuring the future of the auto industry will be made in America by American workers.”

Nio doesn’t have any immediate plans to expand into the U.S. Last November, Nio USA CEO Ganesh Iyer backtracked on his plans for the company to expand into the U.S. by 2025.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.