Tesla’s substantial UK taxpayer subsidies have come under renewed scrutiny following Donald Trump’s announcement of a 25 per cent tariff on imported vehicles to the US.
Chancellor Rachel Reeves said the government is reviewing its electric vehicle transition rules, amid calls for reciprocal tariffs on Tesla imports.
The Liberal Democrats have advocated for tariffs on Tesla, citing owner Elon Musk’s support for the US president.
“Given Musk’s significant backing of Trump, imposing tariffs on Tesla imports would be a fitting response,” a party spokesperson said.
Data published by analysts Tussell in January revealed Tesla has benefited from £188 million in UK taxpayer subsidies since 2016, primarily through the plug-in car grant scheme.
This scheme offers financial incentives for purchasing low-emission vehicles.
Ms 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.
“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.”
A 25 per cent tax on vehicles and vehicle parts imported to the US will come into effect on April 2.
Liberal Democrat deputy leader Daisy Cooper said: “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.”
Mr Musk said tariffs will “affect the price of parts in Tesla cars that come from other countries”, adding that the “cost impact is not trivial”.
This was in response to a post on social media platform X – which he owns – which claimed Tesla “could benefit the most” from tariffs on US imports.
When Mr Trump became president in January, he appointed Mr Musk to a role cutting government costs by leading the newly established Department of Government Efficiency.
Figures from the Society of Motor Manufacturers and Traders show the Tesla Model Y was the fifth most popular new car in the UK in 2024 with 32,862 registrations.
