Three of China's leading electric vehicle (EV) manufacturers, BYD, Geely, and SAIC Motor, have filed a lawsuit against the European Union, challenging the bloc's imposition of hefty tariffs on Chinese EVs.

According to a filing on the website of the General Court of the European Union in Luxembourg on Monday, the companies lodged a complaint against the European Commission. While the specific details of the lawsuit have not been disclosed, it is widely expected that the companies are seeking a ruling to overturn the Commission's decision to impose the tariffs.

The EU Commission had previously launched an anti-subsidy investigation and concluded that Chinese EVs were benefiting from "unfair" subsidies from the Chinese government, distorting the European market. As a result, the Commission imposed additional anti-dumping duties of between 7.8% and 35.3% on top of the existing 10% standard duty.   

These measures led to a significant increase in tariffs on Chinese EVs, with rates ranging from a minimum of 17.8% to a maximum of 45.3% since October last year. Tesla, which manufactures vehicles at its Shanghai factory, was subject to the lowest tariff of 17.8%, while BYD, Geely, and SAIC faced tariffs of 27.0%, 28.8%, and 45.3%, respectively.   

Despite imposing the tariffs, the EU Commission has been engaged in behind-the-scenes negotiations with Chinese authorities to find alternative solutions. China has proposed a price undertaking, committing to not sell below a certain price level in the European market, and export volume controls. However, these proposals have failed to bridge the gap between the two sides.   

The lawsuit filed by the Chinese EV makers is expected to further complicate the ongoing negotiations and escalate trade tensions between the EU and China. The two economic giants have been locked in a trade dispute, with China imposing retaliatory measures on European products such as pork and brandy in response to the EU's tariffs. Moreover, the EU has recently filed a complaint with the World Trade Organization (WTO), alleging that Chinese courts are unfairly setting royalty rates for European companies' intellectual property rights. 

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