Chinese EVs Face New Tariffs in Europe, But Will It Do Anything?
Some Chinese-based automakers could see tariffs of up to 38.1 percent, but it differs by brand.
Miguel CortinaWriterJun 12, 2024
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The European Union announced on Wednesday tariffs of up to 38.1 percent on electric cars built in China. The move comes after an investigation into unfair practices and subsidies from the Chinese government to favor domestic automakers, which the E.U. calls “a threat of economic injury to E.U. battery electric vehicles producers.” These tariffs are on top of the 10 percent duty that’s currently imposed on vehicles imported to the bloc. Last month, the U.S. announced a similar move, increasing tariffs from 25 percent to 100 percent on Chinese EVs.
The tariffs in Europe would go into effect on July 4, but automakers will have different percentages. BYD, the world’s largest producer of electric and plug-in hybrid vehicles, would be taxed 17.4 percent; Geely, which owns Volvo, Polestar, Lotus, and Zeekr, would see a 20 percent tariff; SAIC, which owns MG, would be imposed a 38.1 percent tax. The E.U. says other EV producers in China, which cooperated in the investigation (like NIO), would be subject to a 21 percent tariff, while those who didn’t cooperate would see a 38.1 percent tax. Tesla, which builds electric cars in its Gigafactory Shanghai and exports to Europe, asked to receive its own rate, though it hasn’t been announced.
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The big difference between the tariffs implemented by the U.S. and the E.U. is that America doesn’t have the same kind of exposure to Chinese EVs as Europe does. Chinese automakers like BYD, Geely, SAIC, NIO, Great Wall Motors, and Chery, are just a few brands that have been selling to European customers for years. What’s more, BYD and Chery have announced building factories in Hungary and Spain for the European market, respectively. Chinese automakers have stayed away from announcing plans to open factories in the U.S., but they have a big participation in Mexico, where they plan to open factories.
Another difference is that European automakers like BMW, Mercedes-Benz, and Volkswagen are heavily dependent on the Chinese market, and if the Chinese government retaliates with similar measures, their sales in the biggest car market in the world could be affected. German automakers had about 30 percent of market share in Q1 of this year in China.
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“This decision for additional import duties is the wrong way to go. The E.U. Commission is thus harming European companies and European interests,” said Oliver Zipse, BMW Global CEO. Volkswagen said on a statement to Reuters that: “Countervailing duties are generally not suitable for strengthening the competitiveness of the European automotive industry in the long term—we reject them.” Ola Kallenius, CEO of Mercedes-Benz, added to the news agency that “as an exporting nation, what we don’t need are increasing barriers to trade. We should work on dismantling trade barriers in the spirit of the World Trade Organization.”
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While this measure will end up affecting European consumers, it might also have an impact on the Union’s goals to ban internal combustion engine vehicles by 2035. With Chinese EVs currently offering lower prices and decent range, the bloc’s goal to reduce carbon emissions could be negatively affected without the supply (or demand) currently for cleaner vehicle alternatives from local European companies.
Miguel Cortina
Miguel Cortina is Mexico Editor at MotorTrend, covering the auto industry in the U.S. and south of the border. He joined MotorTrend in January 2015 and is an avid automotive enthusiast who enjoys playing golf, surfing, and running in his free time.