HomeMarket NewsTesla could be part of the European Union's probe into China subsidies

Tesla could be part of the European Union's probe into China subsidies

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Tesla Shanghai Gigafactory

Xiaolu Chu/Getty Images News

Tesla’s stock price (NASDAQ:TSLA) dropped at the start of trading on Tuesday following reports that the company may be included in the European Union’s investigation into potential unfair subsidies in China’s electric vehicles industry. Early findings by the EU indicate that Tesla is one of the companies benefiting from China’s support for the EV sector.

European Union executive vice-president Valdis Dombrovskis stated in an interview with the Financial Times that there is β€œsufficient prima facie evidence” to warrant an inquiry into the importation of electric vehicles from China. Dombrovskis clarified that the investigation is not limited to Chinese brands alone but also includes other automakers that receive production-side subsidies. This raises the possibility that Tesla, which delivers vehicles to Europe from its Shanghai plant, could be subject to the probe. China currently manufactures nearly one-fifth of all electric vehicles sold in Europe.

While Chinese electric car companies like Nio (NIO), XPeng (XPEV), and BYD Companies (OTCPK:BYDDF) have seen increased imports to China this year, they still represent a relatively small portion of the market.

In premarket trading, Tesla’s stock fell by 1.31% to $243.75. However, it remains comfortably above its 100-day and 200-day moving averages. Nio’s stock dropped by 1.80% in early trading, while XPeng’s stock declined by 2.70%.

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