Tesla’s UK taxpayer subsidies are back under the microscope after Donald Trump announced a 25% tariff on vehicles imported to the US.
Chancellor Rachel Reeves revealed that the government is reviewing its electric vehicle rules, with some even calling for tariffs on Tesla imports in response.
The Liberal Democrats have pushed for these tariffs, pointing to Elon Musk's support for Trump. A party spokesperson stated, "Given Musk's significant backing of Trump, imposing tariffs on Tesla imports would be a fitting response."
According to analysts at Tussell, Tesla has received £188 million in UK subsidies since 2016, mainly through the plug-in car grant scheme, which supports low-emission vehicle purchases.
Reeves told BBC Radio 4’s Today programme, “We don’t want to get into a trade war, but we are looking at the zero emission vehicle mandate, which is, I think, why some of that money goes to Tesla, and looking at how we can better support the car manufacturing industry in the UK.
She added, “We announced in the budget last year, I think, around £2 billion for an automotive fund as part of our modern industrial strategy.
“But look, we are working intensely with the US to try to come to an agreement ahead of these tariff increases next week. Let’s see how that goes.”
Starting April 2, a 25% tax on imported vehicles and parts will take effect in the US.
Liberal Democrat deputy leader Daisy Cooper commented, “Our car industry is being left at the mercy of Trump and his destructive trade war. We should be preparing to respond if needed including through Tesla tariffs that hit Trump’s crony Elon Musk in the pocket.”
Musk, in response to concerns on social media platform X (which he owns), said the tariffs would “affect the price of parts in Tesla cars that come from other countries” calling the cost impact “not trivial.”
When Trump became president, he appointed Musk to help cut government costs by leading the newly established Department of Government Efficiency.
In the UK, the Tesla Model Y was the fifth most popular new car in 2024, with 32,862 registrations, according to the Society of Motor Manufacturers and Traders.
