Europe Doubles Down on Chinese EV Tax

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The European Commission (EC) has confirmed its draft decision to impose countervailing duties of more than 36% on imports of battery electric vehicles (EVs) from China.

The rates are slightly lower than those provisionally imposed in July but reinforce the findings of the Commission's ongoing investigation into Chinese EV makers benefitting from substantial subsidies from the Chinese government. The investigation was launched late last year following "growing evidence-based concerns" about the recent and rapid rise in low-priced exports of EVs coming from China to the European Union (EU). The move has been echoed by much harsher responses from the U.S. and, most recently, Canada, which have opted to impose a 100% tariff on imports of China-made electric vehicles. In addition, Canada will also impose a 25% tax on Chinese steel and aluminum. Canadian Prime Minister Justin Trudeau said: "We are transforming Canada's automotive sector to be a global leader in building the vehicles of tomorrow, but actors like China have chosen to give themselves an unfair advantage in the global marketplace".

The severity of the tariffs are marginally lower now and are based to a certain extent how Chinese carmakers and some European carmakers that manufacture EVs in China cooperated with the investigation. When added to the existing 10% tariff on EV imports, some Chinese companies are looking at levies approaching 50%. Tesla Incorporated (NASDAQ:TSLA) (Austin, Texas) had its tariff reduced from just over 20% to 9%, after EC investigators sent to China found that it received less subsidies from China compared to Chinese EV producers. Chinese EV producers, including Chinese EV maker BYD (Xi'An, China), Geely (Hangzhou, China) and SAIC Motor Group Company Ltd (Shanghai, China), face tariffs of 17.0%, 19.3% and 36.3%, respectively.

Europe has seen a huge surge in cheaper, Chinese EVs in the last couple of years. In June, Chinese carmakers secured a record 11% of the European EV market, including the U.K. according to figures from Dataforce. Much of that growth was attributed to dealers and consumers racing to beat the price hike in the EU. The Chinese government has threatened to respond to the tariffs while some Chinese EV makers are looking to build European plants to avoid the tariffs. Industrial Info is tracking a US$1 billion plan by BYD to build a manufacturing plant in Turkey that will produce up to 150,000 vehicles per year. BYD has not officially commented on the project, but Turkey's Minister for Industry and Technology Mehmet Fatih Kacir confirmed the deal. The company has already committed to building a plant in Szeged in Hungary. In addition, SAIC is thought to be looking at building a plant for its MG brand of EVs in Galicia, Spain. Chery Automobile Company Limited (Wuhu, China) purchased a former Barcelona manufacturing plant earlier this year which it is revamping with a Spanish EV partner to become one of its main exporting facilities worldwide, with the goal of producing 150,000 vehicles a year by 2029.

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