EU to slap extra tariffs on Chinese electric cars in a bid to close competition gap

China-made battery electric vehicles (BEVs) will soon be subject to import tariffs when they are brought into the European Union's borderless market, where demand for these environmentally-friendly products has soared in recent years.

The European Commission announced on Wednesday the first provisional decision under its anti-subsidy inquiry for BEVs assembled in China, split by brands according to the suspected level of state aid received:

  • BYD: 17.4%
  • Geely: 20%
  • SAIC: 38.1%
  • Other BEV producers in China that cooperated in the investigation but have not been individually sampled: 21%
  • Other BEV producers in China that did not cooperate: 38.1%

The level will come on top of the existing 10% import tariff and defies industry expectations of a 20% rate. The surprise reflects the Commission's damaging findings, which show how the Communist Party is heavily propping the entire supply chain of BEVs, from the extraction of raw materials to the shipping towards European ports.

The measures will be introduced on 5 July if China fails to offer convincing, effective solutions to remedy its unfair practices. Beijing has long refused to engage with Western allies to address trade frictions and often denies the source of the problem itself.

In practice, the decision means both Chinese and Western brands that operate plants in the Asian country will be affected by the increase, albeit not equally. For example: Tesla and BMW will be subject to the average 21% tariff, while SAIC, with whom Volkswagen and General Motors have joint ventures, will be subject to a steep 38.1% rate. (Tesla has filed a "substantiated request" and may be granted its tailor-made rate later this year.)

It was notable that Shenzhen-based BYD, which aims to conquer 5% of the bloc's BEV market, was given the least pronounced rate of the group. BYD has made fast inroads in the sector and earlier this year snatched Tesla's crown as the world's top BEV maker.

"This is based on clear evidence of our extensive investigation and in full respect of WTO [World Trade Organisation] rules. We will now engage with Chinese authorities and all parties with a view to finalising this investigation," Valdis Dombrovskis, the Commission's Executive Vice-President in charge of trade, said in a statement.

"Our goal is to restore the level-playing field and ensure that the European market remains open to electric vehicles producers from China, provided that they play by globally agreed trade rules," he added

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12/06/2024
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