On October 29, the European Union (EU) officially increased the import tax on electric vehicles (EVs) from China from the previous 7.8% to 35.3%, plus the standard import tax on cars of 10% to 45.3%.

This is a heavy pressure on Chinese electric vehicle businesses, because the EU is a large market after the US and Canada took a very strong hit, with a tax rate of up to 100% on Chinese electric vehicles.

China said it would take all necessary measures to protect domestic companies and hoped the two sides could find a solution to avoid escalating trade tensions. However, Beijing may have to resort to retaliatory measures, targeting agricultural products and luxury goods imported from Europe.

The European Union launched an anti-subsidy investigation into Chinese electric vehicles last year, alleging that they are illegally subsidized and pose an economic threat to the EU’s electric vehicle industry. China has excess production capacity of 3 million electric vehicles a year, twice the size of the EU market.

In mid-May, the US increased tariffs from 25% to 100% on electric vehicles imported from China to prevent a flood of cheap cars from flooding the domestic market, thereby protecting the domestic industry.

Elon Musk's Tesla electric car stock had its biggest one-day gain in more than a decade on October 24, rising 22% after Tesla reported a sharp increase in third-quarter profits and the launch of the Tesla Robotvan and Robotaxi fully self-driving electric vehicles.

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China is the world's largest electric car market. Photo: DW

Tesla's capitalization skyrocketed from 700 billion USD to more than 836 billion USD, and as of October 31, it remained at 833 billion USD; ranking first among car manufacturers in the world, much higher than Toyota's 232 billion USD, China's 115 billion USD BYD, Mercedes-Benz's 65 billion USD...

Elon Musk also recorded an increase of nearly 34 billion USD in his personal net worth, to 270 billion USD on October 24 and to 268.2 billion USD on October 31; firmly holding the position of the richest person on the planet, far ahead of the second billionaire - Mr. Jeff Bezos - by more than 60 billion USD.

Will Tesla Boom If Donald Trump Wins?

The question is whether Tesla will grow even more explosively if Donald Trump wins the US presidential election?

With his recent huge support for Mr. Trump in the race for the White House, Elon Musk faces two possibilities: gain and loss.

That would be to get a position in the new administration if Mr. Trump is elected and to get advantages in policies and contracts in both the aerospace and electric vehicle sectors.

However, Elon Musk's businesses are said to face many difficulties if Kamala Harris is elected.

However, when it comes to electric vehicles, Elon Musk is not necessarily in favor of imposing high import tariffs on products from China. The reason is that China is an important market for Musk, accounting for 22.5% of Tesla's revenue in 2023, according to Nasdaq. Tesla's Shanghai factory is one of the company's key factories in the global supply chain.

During a visit to China in May, Elon Musk said Tesla was competing well in the Chinese market and was not subject to special tariffs or discrimination. This was a stark departure from his previous position, when he said that without US action, Chinese electric cars would crush global rivals.

In fact, China's electric vehicle prices are much lower than the world's. The EU raised tariffs because the bloc accused China of providing financial incentives, subsidies, and allowing domestic electric vehicle companies access to land, batteries, raw materials, etc. at prices lower than market prices.

Chinese car companies also have the advantage that China is the world's largest electric vehicle market, self-driving technology is quite developed and popular, with new names entering the market but breaking through very quickly such as Xiaomi - ranked third in the world in electric vehicles, with a capitalization of 83 billion USD, higher than Mercedes.

By raising tariffs, countries can prevent cheap Chinese electric cars but make Chinese companies invest in innovation and increase competitiveness. China will also boost production in other countries, including Southeast Asia, Türkiye, Uzbekistan, Brazil, Mexico, Hungary, ... to avoid tariffs.

Chinese electric vehicle giant BYD is expanding its production and sales in many countries. Thailand has felt the first negative impacts when its domestic production has to face low-cost competitors.