Europe Proposes Import Tax on Chinese EVs

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The European Union (EU) has announced that battery electric vehicle (BEV) imports from China will have a levy of up to 38.1% applied from July in an effort to protect its motor industry.

Following an investigation by the European Commission (EC) started last October, the levy on Chinese EVs will be applied after the Commission provisionally concluded that Chinese EV makers had benefited greatly from government subsidies that allowed them to undercut European car rivals. The move comes a couple of months after the U.S. quadrupled duties to 100% for Chinese EVs and is expected to add billions of euros to the costs of Chinese automakers. The move has received a mixed reaction, with many European automakers and some countries denouncing it. Some of them, which manufacture BEVs in China for the European market, may also be hit by the levy. It is thought that China may impose a tax of up to 25% on European car imports in retaliation.

The Commission wrote: "As part of its ongoing investigation, the Commission has provisionally concluded that the battery electric vehicles (BEV) value chain in China benefits from unfair subsidization, which is causing a threat of economic injury to EU BEV producers. The investigation also examined the likely consequences and impact of measures on importers, users and consumers of BEVs in the EU. Consequently, the Commission has reached out to Chinese authorities to discuss these findings and explore possible ways to resolve the issues identified in a WTO-compatible manner. Should discussions with Chinese authorities not lead to an effective solution, these provisional countervailing duties would be introduced from 4 July."

The Commission decided that the duties applied to three sample BEV producers BYD (Xi'An, China), Geely (Hangzhou, China) and SAIC Motor Group Company Ltd (Shanghai, China) will be 17.4%; 20% and 38.1% respectively.

Europe is facing a tidal wave of Chinese-made BEV imports, with recent reports estimating that one in four of all EVs sold in the region this year will be made in China. Last year, they accounted for almost 20% of that total but are on track to hit 25% this year according to research from Transport & Environment (T&E), a leading European clean-transport organization. For additional information, see April 15, 2024, article - Chinese-Made EVs Dominating European Market .

China has rejected the proposed levy. "What I want to emphasize is that this anti-subsidy investigation is a typical case of protectionism," said Chinese foreign ministry spokesperson Lin Jian. "For this reason, the European side imposed tariffs on electric vehicles imported from China, which violates the principles of market economy and international trade rules, damages China-EU economic and trade cooperation and the stability of the global automobile production and supply chain. It will ultimately undermine Europe's own interests. We urge the EU to abide by its commitment to support free trade and oppose protectionism, and work with China to safeguard the overall situation of China-EU economic and trade cooperation. China will take all necessary measures to firmly safeguard its legitimate rights and interests."

China's Cui Dongshu, secretary general of the China Passenger Car Association (CPCA), discounted the impact of the proposed levies: "The EU's provisional tariffs come basically within our expectations, which won't have much of an impact on the majority of Chinese firms." The European Automobile Manufacturers' Association (ACEA) does not agree with the tariffs. "What the European automotive sector needs above all else to be globally competitive is a robust industrial strategy for electromobility," stated ACEA Director General Sigrid de Vries. "This means ensuring access to critical materials and affordable energy, a coherent regulatory framework, sufficient charging and hydrogen re-filling infrastructure, market incentives, and so much more."

According to Volkswagen, "Countervailing duties are generally not suitable for strengthening the competitiveness of the European automotive industry in the long term--we reject them. The timing of the Commission's decision is detrimental to the current weak demand for BEV vehicles in Germany and Europe. The negative effects of this decision outweigh any potential benefits for the European and especially the German automotive industry."

Earlier this year, Industrial Info reported on a global surge in investments for battery gigafactory projects and is tracking 54 active capital-spending projects globally, worth almost $42 billion. Subscribers to Industrial Info's Global Market Intelligence (GMI) Industrial Manufacturing Project Database can click here for the project reports. For additional information, see February 13, 2024, article - Gigafactories Ride the Electric Wave: Investments Surge Amid EV Battery Revolution.

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