EV giant Tesla Inc (NASDAQ:TSLA) has raised the price of its cheapest offering – the Model 3 sedan – in Germany by €1,500 (about $1,625), possibly owing to an increase in import tariffs levied on cars made in China and sold in the European Union.

New Prices: The base version of the Model 3 now starts at €42,490 (about $46,000) in Germany, as per Tesla’s website. The rear-wheel drive Model 3 was previously priced at €40,990 (about $44,400), or €1,500 less than today.

The more premium long-range all-wheel drive version now starts at 51,490 euros while the Performance variant starts at €58,490 (about $63,400.)

The Tesla Model 3s sold in the EU are manufactured at Tesla’s gigafactory in Shanghai.

Why It Matters: The price hike comes on the heels of a tariff hike deployed on EVs made in China.

The European Commission last week imposed additional tariffs of up to 37.6% on EV imports from China over concerns that cheaper EVs from the country, which benefit from state subsidies, will push domestic players out of the market.

The new tariffs are on a provisional basis for a maximum duration of four months until after the completion of the anti-subsidy investigation commenced by the commission last year. Within the period, the commission will decide on definitive duties that will typically apply for five years, the commission said.

Tesla cooperated with the EU investigation and has been given a 20.8% weighted average duty, for now. The commission said the company has made a request and may receive an individually calculated duty rate at the definitive stage.

Tesla had warned of a price hike last month.

"Model 3 price is likely to increase from 1 July 2024 due to expected import duties," a message on Tesla's German website read. The message, however, did not specify how much the prices would be increased.

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Tesla Hikes Model 3 Prices In Germany After Increase In Tariffs On China-Made EVs