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The European Commission said on Wednesday it would impose tariffs of up to 38% on Chinese electric vehicles after its investigation concluded that the country’s vehicle makers benefit “from unfair subsidisation” from Beijing.
The bloc has reached out to the Chinese government to discuss the findings, which it argues cause economic losses for EU-based EV makers.
On Thursday, the Chinese government said it would file a suit with the World Trade Organization to challenge the bloc’s decision that China’s commerce ministry spokesperson characterized as “naked protectionist behavior.”
SIGNALS
European automakers have mixed feelings about tariffs
European EV manufacturers struggle to keep up with Chinese car makers, in part because the low costs of Chinese-built vehicles mean that European makers can’t make a profit. Tariffs on Chinese imported cars could “relevel the playing field,” Olof Gill, the EU Commission spokesperson for trade, told the Financial Times’ Tech Tonic podcast. But European automakers aren’t universally thrilled about the prospect of tariffs, the podcast noted: “German car companies make a lot of money in China, and the risk is an EU investigation into Chinese electric vehicles could lead to retaliation or even a trade war,” said FT journalist James Kynge.
Western manufacturers reining in plans
Despite US and European tariffs on Chinese vehicles, Western manufacturers seem to be coming to a realization: “China has won the contest for EV supremacy,” Morgan Stanley auto analyst Adam Jonas recently said. American companies, including GM and Ford, have probably given up on being leaders in EVs given the high cost to consumers, the Australian auto outlet The Driven noted: “US and European car makers have shown that they can make very nice electric vehicles, but none of them are cheap.”
Tariffs are unlikely to halt Chinese giants completely
Tariffs below 50% are unlikely to stop all imports of Chinese EVs to the EU, since duties are higher in other countries like the US, which has imposed its own 100% tariff, a Rhodium Group analysis said. For BYD, which leads the market for Chinese EV imports to the bloc, there’s even room to grow, one analyst told CNN. “BYD is already building a factory in Europe, and is likely to still profitably export to the EU even with 17% duties,” the analyst said. Other manufacturers, like state-owned automaker SAIC, are expected to feel the impact of the tariffs more.