The EU wants to set minimum prices for Chinese electric cars: what this means and why it is needed
14 January 09:51
The European Union has hinted at a possible way out of the trade confrontation with China over electric vehicles, outlining a framework that would allow Chinese automakers to avoid punitive import duties in exchange for accepting minimum import prices. This was reported by Ukravtoprom, according to "Komersant Ukrainian".
What is the essence of the minimum price idea?
This refers to so-called “price commitments” that Chinese electric vehicle exporters can voluntarily undertake. If companies agree to sell their electric cars in the EU at no less than a specified minimum level, they will be able to avoid additional import duties imposed or planned as part of an anti-subsidy investigation.
In fact, the EU is offering a choice:
- either pay higher duties for market access;
- or agree to minimum prices that, according to Brussels, will neutralize the effect of Chinese state subsidies.
The position of the European Commission
The European Commission has published recommendations calling on Chinese manufacturers to submit proposals for such price commitments. The documents state that these proposals should:
- set clear minimum prices for electric vehicles;
- describe sales channels in the EU;
- include mechanisms to prevent cross-subsidization;
- take into account possible investment plans in the European Union, in particular the localisation of production.
According to the European Commission’s plan, this approach should provide protection equivalent to direct customs barriers, but with less risk of escalating a trade war.
Why the EU compromised
The European electric vehicle market is growing rapidly, and Chinese brands are actively increasing their presence thanks to lower prices. Brussels believes that prices are significantly underestimated due to Chinese state subsidies, which puts European manufacturers at a disadvantage.
At the same time, tough tariffs carry risks:
- retaliatory measures by China;
- higher prices for electric vehicles for European consumers;
- disruptions in supply chains.
That is why the minimum price mechanism is seen as a less confrontational option.
China’s reaction
The Chinese Chamber of Commerce in the EU has welcomed Brussels’ initiative, calling it a “soft landing” in the trade dispute.
This reaction indicates that Beijing is ready to discuss compromise solutions in order to avoid a large-scale confrontation with the European Union.
What this means for the electric vehicle market
If the minimum price mechanism is implemented:
- Chinese electric vehicles in the EU will become more expensive but remain competitive;
- European automakers will receive partial protection from dumping;
- the trade conflict between the EU and China may enter a manageable phase, without sharp mutual sanctions.
