EU imposes stiff duties on Chinese electric cars: what it means for the market
4 July 2024 14:21
The European Union has announced the introduction of temporary duties on imports of Chinese-made electric vehicles. This was reported by "Komersant Ukrainian" reports with reference to Bloomberg.
The duties come into force on Friday, 5 July 2024. Duty rates range from 17.4% to 37.6%, depending on the manufacturer. SAIC Motor Corp. (MG manufacturer) will face the highest duty of 37.6%. Geely (owner of Volvo Car AB) and BYD Co. will receive additional fees of 19.9% and 17.4%, respectively. Other electric vehicle manufacturers in China that cooperated with the investigation will face a weighted average duty of 20.8%. Non-cooperating companies will face an additional 37.6% duty.
The decision follows an EU anti-subsidy investigation and could lead to an escalation of trade tensions with Beijing.
The EU claims that the investigation revealed that China has subsidised its electric vehicle industry to a level that causes economic injury to EU automakers. The final duties are expected to take effect by November unless the parties reach an alternative solution.
China has threatened to retaliate and has already launched a targeted anti-dumping investigation into pork imports. Beijing has also warned of possible retaliation against European agricultural products, aircraft and cars with large engines.
Despite the tensions, the EU and China continue consultations on how to proceed. Brussels insists that any solution must be based on WTO rules and address the problem of harmful subsidies.
Experts predict that the new duties could reduce imports of electric vehicles from China by a quarter, which is approximately $4 billion in monetary terms.
Are automakers against it?
Many European automakers are opposed to the increase in duties, warning of potential negative consequences. In particular, they fear that such measures could slow down the decarbonisation of the transport sector by limiting the availability of cheaper electric vehicles to consumers. This, in turn, could lead to higher prices and less choice in the European market.
In addition, manufacturers are concerned about possible retaliation from China, as many European companies have significant interests in the Chinese market. There are also concerns about the disruption of global supply chains and the reduced competitiveness of European manufacturers due to reduced incentives for innovation.
Some manufacturers have warned of a possible increase in production costs if duties are applied to Chinese components they use.
Finally, there is concern about the potential deterioration of diplomatic and economic relations between the EU and China, which could have negative consequences for business.
The position of BMW CEO Oliver Zipse is illustrative, as he called the tariffs a “dead end”, arguing that they will not only not strengthen European automakers, but could also harm the business model of globally active companies and even slow down the transition to cleaner transport in Europe.
The largest number ofnew electric vehicles were imported to Ukraine from China.
