Chinese Electric Cars Face EU Tariffs as Negotiations Continue

The European Union has decided to impose provisional tariffs on Chinese electric vehicles starting today, while discussions with the Chinese government are ongoing with a deadline set for October to make these tariffs permanent.

Tariffs Impact Chinese Car Makers

The additional tariffs have hit MG owner SAIC particularly hard, with an additional 37.6% on the wholesale price of imported EVs on top of the existing 10% charge. Other Chinese companies like BYD and Geely are also facing additional tariffs ranging from 17.4% to 19.9%.

Implications for the Industry

The European Commission has stated that cheaper Chinese EVs pose a threat to EU battery electric vehicle (BEV) producers, leading to the imposition of extra tariffs due to unfair subsidization in China. German car manufacturers, including Mercedes-Benz, BMW, and Volkswagen, are concerned about potential retaliation from China, which could jeopardize their high-profit export of high-end internal combustion engine cars to China.

Ongoing Negotiations and Future Outlook

Negotiations with China are still in progress to find a WTO-compatible solution, as the provisional tariffs will be in effect for four months before permanent tariffs are applied for five years. The EU is a significant export destination for Chinese EVs, accounting for 33% of total exports in 2023.

UK’s Stance on Tariffs

The UK has not yet followed the EU in raising tariffs on Chinese EVs, but industry experts believe that the UK will eventually have to align with the EU or face pressure from Chinese manufacturers to shift EV sales to other markets. A UK investigation into unfair subsidies for Chinese EV makers could be initiated if a complaint is lodged by a British manufacturer or under exceptional circumstances by the Secretary of State.

In conclusion, the automotive industry is closely monitoring the developments in EU-China trade relations and the impact of tariffs on the electric vehicle market. Stay tuned for further updates on this evolving situation.