Model Y can be priced cheaper than Model 3 in Europe despite that Tesla got half of BYD's import tariff

Tesla will pay half of what its biggest competitor BYD will be paying for importing its electric cars and selling them in Europe.

The European Commission has made a decision on the amount of tariffs for EV imports from China, and has bestowed preferential treatment on Tesla cars.

The EC says that it has reached "the decision to grant an individual duty rate to Tesla as an exporter from China established at 9% at this stage," whereas the BYD rate is still set at 17%.

Tesla makes the Model Y in Germany, but imports the Model 3 from China, and it already raised the Model 3 price in Europe to preempt the upcoming tariffs. It only bumped the Model 3 pricing by about 3%, though, so the new 9% import tax may force it to increase it even more to compensate.

Such a move would be risky, since certain Model Y configurations already cost less than the Model 3 with the incentives that apply for the EU-made SUV. Applying a 9% price increase to the base Model 3 price before the new tariff, for instance, will make it cost what the RWD Model Y commands with incentives in Germany or France. The long-range Model 3 would actually become even more expensive than the Model Y LR if Tesla decides to fully offset the import tax.

It doesn't have to do it immediately, though, as the Commission is giving the EV makers 10 days to present their comments, and will make a final mandatory determination by October 30. After that, "any potential measures will be in force for 5 years, extendable upon substantiated request and subsequent review," tips the European Commission.

BYD and other Chinese EV makers are already moving their battery and vehicle production to Europe, so it might not be long before they circumvent the import tariffs by establishing a local manufacturing base, which may have been one of the goals of the tariff legislation all along.

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