Saturday, July 20, 2024

EU to hit Chinese electric cars with tariffs of up to 48% -Dlight News

Brussels will impose tariffs of up to almost 50 per cent on Chinese electric vehicles, brushing aside German government warnings that the move risks starting a costly trade war with Beijing.

The European Commission notified carmakers on Wednesday that it will provisionally apply additional duties of between 17 and 38 per cent on imported Chinese EVs from next month.

The duties will be applied on top of existing 10 per cent tariffs on all Chinese EVs, depending on the extent to which they complied with an EU investigation into electric carmakers.

Major exporters including BYD, the world’s largest electric-vehicle manufacturer, and Geely will be hit by additional individual tariffs of between 17 and 20 per cent.

EVs made in China by Tesla “may receive an individually calculated duty rate”, the commission said.

Brussels said its probe revealed the EV supply chain was “heavily subsidised in China, and that imports of Chinese [electric vehicles] presented a threat of clearly foreseeable and imminent injury to EU industry”.

Manufacturers that were considered to have co-operated with the EU investigation, announced in September but which were not assigned individual rates, will be subject to a 21 per cent average rate.

Those that have not co-operated will be hit by the 38 per cent rate, a level still well short of the 100 per cent duties applied by the US.

European Commission vice-president Margaritis Schinas said the commission had “reached out” to Chinese authorities to “explore possible ways to resolve” the issue. If no solution is found, the duties will apply from July 4.

China’s commerce ministry said it was “highly concerned and strongly dissatisfied” with the “ill-informed and lawless” EU action, warning that it would “take all necessary measures” to protect Chinese companies’ rights.

“The European Commission politicise and weaponise economic and trade issues,” the ministry said in a statement. “The EU fabricated and exaggerated the so-called subsidies. This is a naked protectionist act.”

The Chinese Chamber of Commerce to the EU said it was shocked by the tariffs, which would “pose a serious market barrier”.

The tariffs, championed by France, will raise billions of euros for the EU budget annually as sales of Chinese EVs grow in Europe. China, the bloc’s largest trading partner, exported €10bn of electric cars to the EU in 2023, doubling its market share last year to 8 per cent, according to analysts at Rhodium Group.

Beijing, which already applies a 15 per cent tariff on European EVs, has sought to persuade a majority of EU capitals to oppose the new tariffs.

Germany, Sweden and Hungary have said they do not approve of the move, fearing Chinese retaliation. EU officials say Berlin put pressure on Ursula von der Leyen, who is seeking a second term as commission president, to drop the anti-subsidy investigation.

German Chancellor Olaf Scholz recently warned that “isolation and illegal customs barriers . . . ultimately just makes everything more expensive, and everyone poorer”.

But intense lobbying by Scholz’s government had “not worked”, said a person briefed on the process.

ACEA, the EU’s car sector body, backed the tariffs, saying a “robust industrial strategy” was needed for the bloc’s automotive industry to be globally competitive.

The Kiel Institute, an economic think-tank, has estimated that an extra 20 per cent tariff on Chinese electric cars would reduce imports by a quarter. It calculated that with 500,000 vehicles imported in 2023, this corresponded to an estimated 125,000 units worth almost $4bn.

“The decline would largely be offset by an increase in production within the EU and a lower volume of EV exports, which would likely mean noticeably higher prices for end consumers,” the researchers concluded.  

The commission expects Chinese brands to hold a 15 per cent share of the EU’s market in EVs next year. It says their prices are typically 20 per cent lower than those of EU-made models.

Valdis Dombrovskis, EU trade commissioner, acknowledged EVs were crucial for the green transition when he announced the investigation in October. But he added: “Competition must be fair.”

His department amassed evidence Chinese carmakers and their suppliers received subsidised loans, tax breaks and cheap land, according to officials.

Many EU carmakers fear China might respond in kind or even block them from its market. European brands accounted for about 6 per cent of EV sales in the country in 2022.

Germany exported 216,299 cars to China in 2023, a drop of 15 per cent on the year before; brands including Mercedes and Volkswagen also operate plants in the country.

Geely owns Volvo of Sweden. Prime Minister Ulf Kristersson has joined Scholz and Hungarian premier Viktor Orbán in opposing the EU tariffs.

The three leaders would need to secure at least 11 other governments to overturn the commission’s decision on tariffs.

Member states will be asked to vote on the tariffs before November 2. Definitive duties are usually imposed for five years.

BYD, Geely and Tesla China did not immediately respond to requests for comment.

Shanghai-headquartered EV maker Nio, which has invested heavily in developing the EU market, said the use of tariffs “hinders rather than promotes global environmental protection, emission reduction and sustainable development”, but it remained “hopeful for a solution”.

Additional reporting by Wenjie Ding in Beijing and Gloria Li in Hong Kong

Related Articles

- Advertisement -

Latest Articles

- Advertisement -