Tesla faces scrutiny over UK subsidies amid Trump tariffs

In the UK, scrutiny surrounding Tesla's financial support has intensified following Donald Trump's announcement of a 25 percent tariff on imported vehicles to the United States, set to take effect on April 2. The company, led by Elon Musk, has received a substantial amount of taxpayer funding amounting to £188 million through subsidies since 2016, primarily benefiting from the plug-in car grant scheme. Chancellor Rachel Reeves stated that the government is actively reviewing its electric vehicle transition rules in light of the tariffs and the implications for domestic car manufacturing. The Liberal Democrats have voiced strong support for implementing reciprocal tariffs on Tesla, arguing that it would be an appropriate response to Musk's backing of Trump, which they view as influencing Tesla's competitive standing in the UK market. The impact of the tariffs could complicate Tesla's supply chain, according to Musk, who indicated that such financial impositions could heighten the cost of parts that are imported from other countries for their vehicles. He remarked that the cost impact is anything but trivial, suggesting a significant economic ripple effect that could influence vehicle pricing for Tesla consumers both in the UK and the US. Moreover, the government is seeking a resolution with US authorities to avert any full-blown trade war, emphasizing its commitment to bolster the UK automotive industry. The announcement regarding the £2 billion automotive fund as part of the modern industrial strategy showcases efforts to enhance local manufacturing capabilities. Additionally, the Tesla Model Y has seen remarkable popularity in the UK, ranking fifth in new car registrations in 2024 with 32,862 units sold, illustrating the brand's strong market presence amid the ongoing debate over its subsidy eligibility.