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Background: the European Commission's decision on Chinese electric cars on European soil
As mentioned in our previous article, a recent decision by the European Union has attracted a lot of attention: the imposition of new taxes on electric cars cars. Following a 9-month investigation, this new measure aims to regulate the import of these vehiclesdirectly affecting up to 30 different models.
This tax represents a strategic pivot in European trade policyaimed at protecting and stimulating the local automotive industry, while responding to growing environmental concerns. Indeed, this industry employs 14.6 million workers in the EU.
But this decision is fraught with challenges and will have a significant impact on the eco-friendly automotive industry, especially as the price of an electric car remains the main barrier to adoption.
Before we delve into the nitty-gritty of the new tax and explore the list of models affected, let's take a quick look at the ins and outs of this decision.
Unfair competition and dumping by Chinese manufacturers in Europe
As briefly explained above, this drastic measure follows accusations of unfair unfair state subsidies granted to Chinese automakers by their government.
For the record, the European Union's decision is based on concerns about concerns about controlling the production of battery raw materials and their lower assembly costswhich could distort the market.
To illustrate this point, the findings of the European investigators indicate that the Chinese government has heavily subsidized its automotive industry, with estimates reaching around 215 billion eurosresulting in significant economic damage for carmakers in the European Union.
What's more, this escalation comes against a backdrop of growing trade tensions between the West and China, which is also accused of anti-competitive practices in other sectors such as :
- the batteries,
- the wind turbines,
- and solar panels.
Read: Solar panels for electric cars: everything you need to know
By specifically targeting electric vehicles, Europe aims to restore a level playing field for local manufacturerscommitted to massive investment in the energy transition, despite higher production costs.
The measures applied
Since Friday July 5, the European Union has been applying additional customs duties, known as "countervailing duties", to electric vehicles manufactured in Chinese factories, on top of the existing 10% tax.
Please note that these taxes are provisionalpending the introduction of definitive tariffs in November if no agreement is reached with China.
But that's not all: for these new tariffs to be validated, the unanimous approval of theunanimous approval of all 27 member states is required.. The proposal will be rejected if a qualified majority (at least 15 countries representing 65% of the EU population) opposes it.
According to a press release from the European Commission, the surcharges imposed are as follows:
Other manufacturers could face an average 21% if they cooperated with the Commission's investigation.. In this case, manufacturers will be subject to a rate of 37,6 %. As these are only provisional countervailing duties, the funds will be deposited in a dedicated funds will be deposited in a dedicated account and will only be collected in the autumn if these taxes become definitive.
Worth noting Brussels is taking a softer line than the United States, which recently decided to raise tariffs on Chinese electric vehicles from 25% to 100%.
According to the German Kiel Institute, the application of these additional duties could lead to a a 42% drop in imports of electric vehicles from China. However, this drop could be offset by an increase in sales by European manufacturers and imports from third countries. Finally, theexpected impact on electric car prices in Europe remains moderate, with an estimated increase of between 0.3% and 0.9%..
Nevertheless, the EU, while seeking to slow down imports of Chinese electric vehicles without totally blocking themHowever, the EU claims to respect World Trade Organization (WTO) standards.
The reaction of Chinese and European manufacturers
As stated in the previous article, Beijing has threatened threats of retaliation against the EU..
In mid-June, China initiated anti-dumping investigation on European on imports of European pork, following a similar investigation launched in January concerning brandiesnotably cognac.
But that's not all: the Chinese press also mentions :
- the wines,
- the dairy products,
- and vehicles.
At the same time, several European manufacturers are concerned about this measure, including Audi, Mercedes, BMW and Volkswagenas China accounts for 40% of their worldwide sales.
In contrast, we have the CEO of Renault in favor of this measure because he believes that competition between the 2 players is unbalanced.
The 30 electric vehicles subject to this additional tax
Currently, of the 110 electric cars available for purchase in France in 2024, some 30 are subject to increased customs duties by the European Union. However, the exact impact on dealership sales prices remains uncertain.
Electric vehicles assembled in China subject to customs duty
In fact, there are international brand vehicles manufactured in China that are also targeted, including :
- the BMW iX3,
- the Cupra Tavascan,
- the Dacia Spring,
- the Honda e:Ny1,
- the Lotus Eletre,
- the Lotus Emeya,
- the Mini Cooper SE,
- the Mini Aceman SE,
- the Smart #1,
- the Smart #3,
- the Tesla Model 3.
- and the Volvo EX30.
Chinese electric vehicles subject to customs duty
Having said that, here is the list of the rest of the Chinese electric cars that will be impacted by these tariffs:
- Aiways U5
- Aiways U6
- BYD Atto 3
- BYD Dolphin
- BYD Han
- BYD Seal
- BYD Seal U
- BYD Tang
- MG 4
- MG 5
- MG Marvel R
- MG ZS
- Polestar 2
- Seres 3
- Seres 5
- Skyworth K
- Xpeng G6
- Xpeng G9
Conclusion
The European Union's decision to tax Chinese electric cars marks a turning point in the global electromobility race..
This protectionist measure raises many questions about the future of the European automotive market and its trade relations with China. Will it enable European manufacturers to regain ground in the face of Chinese competition? Is it the right way to support the ecological transition? And what concrete impact will it have on European consumers?
To keep abreast of developments in this area and discover its impact on the electric car market, be sure to check out our upcoming articles on Beev!
