EU Imposes Hefty Tariffs on Chinese Electric Vehicles

The European Union has taken decisive action to shield its automotive sector by raising tariffs on Chinese electric vehicles (EVs). The new tariffs, which range from 17.4% to 37.6%, are added to the existing 10% duty on all EVs imported from China. This move is expected to significantly impact the pricing and affordability of EVs across Europe, posing a major challenge for Chinese manufacturers and affecting Western firms producing cars in China.

The new tariffs aim to counter what EU officials describe as “unfair subsidization” by China, which they claim allows Chinese-made EVs to be sold at much lower prices than those produced within the EU. Beijing has consistently denied these allegations, which have also been echoed by the United States.

The tariffs, effective immediately but provisional pending further investigation, vary depending on the estimated state aid received by each company. This differentiation has led to varied impacts on different manufacturers:

SAIC Motor Corp.: Hit with the highest tariff of 37.6%, this state-owned enterprise partners with Volkswagen and General Motors and owns the popular MG brand.

BYD (Build Your Dreams): Faces a 17.4% tariff, the lowest increase among the major Chinese EV makers, potentially giving it a competitive edge in the European market.

Geely: Owner of Volvo, subjected to a 19.9% tariff, will still be able to export profitably but with reduced margins.

Western automakers, including those with operations in China like Tesla, also face increased tariffs, with those cooperating with the EU probe facing an additional 20.8% duty, while non-cooperative firms will pay up to 37.6%.

The tariff hike has already begun to influence consumer decisions and market dynamics. For instance:

Patryk Krupcala, an architect from Poland, chose the MG4 for its affordability and performance but mentioned that the new tariffs do not affect his purchase as it was finalized before the imposition.

Luís Filipe Costa, an insurance executive from Portugal, who recently bought a BYD Seal, stated that price was a key factor, and he would have still chosen BYD despite the new tariffs, as other brands are equally affected.

The tariffs are likely to reduce the influx of Chinese-made EVs into the EU, alleviating competitive pressure on local manufacturers. The EU’s decision could be more impactful than similar measures by the US, given the higher market penetration of Chinese EVs in Europe. According to Transport and Environment (T&E), the market share of Chinese EVs in the EU grew from 0.4% in 2019 to almost 8% in 2022, with projections suggesting it could reach 20% by 2027.