So what are the details, how will this impact the industry and will it affect the price of cars at the dealer’s gas station?
What are the rates?
The tariffs are aimed at countering alleged state aid to China’s auto industry, which allows exported vehicles to be sold at lower prices than those of global rivals.
It follows a nine-month investigation into alleged unfair state subsidies on Chinese battery electric vehicles (BEVs). The rates differ per brand.
The MG owner, SAIC, faces the highest tariff. Geely, which has a stake in Volvo, faces a 20% tariff. A 17.4% tax will be applied to BYD brands, including the Dolphin and Seal cars launched in the EU last year.
EV makers who worked with EU researchers will face a 21% tariff, while those who did not face the highest level of 38.1%.
A rate of 17.1% will increase the cost of a €30,000 entry-level model by €5,250. A rate of 38.1% translates into a price increase of €11,450.
The duties come on top of the existing 10% levy on cars imported into the EU, meaning Chinese-made electric vehicles will face total tariffs of up to 48%.
When will they take action?
In theory July 4th. But Chinese companies have until then to provide evidence to dispute the EU’s findings. The rates could then be adjusted.
The European Commission has offered the prospect of resolving the dispute through talks before the tariffs provisionally come into effect on July 4.
If a consumer ordered a car before this date and the price has already been fixed, he should avoid the price increase but should check his contract.
The EU believes that conglomerates like BYD can absorb the level of subsidies and still compete with European rivals by not fully passing on the tariffs to consumers.
What is the extent of Chinese state aid alleged by the EU?
The EU claims that every stage of the EV production process in China, from the mine that produces lithium used in batteries to the shipment of cars to Rotterdam and Zeebrugge, is subsidized by the state at national, regional and local levels.
The investigation also found that cheap or free land was being transferred to car factories.
It found that there were case-specific subsidies involving the alleged supply of lithium and batteries below market prices, with battery suppliers acting as government agencies implementing national industrial policy. It was also found that tax exemptions existed for the battery sector.
The research revealed a range of financing benefits, including green bonds issued at lower interest rates than available on international markets, and preferential refinancing rates for funds dispersed to support the sector. Xi Jinping hopes to gain global dominance in the green technology sector, which also includes solar panels, heat pumps and wind turbines.
What is the impact on European industry?
The EU claims that the state aid not only allows Chinese car suppliers to directly undermine European rivals, but is also delaying the EU’s transition from internal combustion engines (ICE) to BEVs. The EU plans to end sales of new ICE cars by 2035.
According to the EU, Chinese-made cars would account for 25% of the EU market in 2023, up from 3.9%.
The EU argues that the brutal trade wars in China, which have depressed prices at home, are now playing out in Europe, with China effectively forcing EU manufacturers to suppress their own prices, which in turn hurts their profits and future potential investments.
What did the Chinese say?
A spokesperson for China’s Foreign Ministry, Lin Jian, said the EU investigation was a “typical case of protectionism” and that tariffs would undermine China-EU economic cooperation and the stability of vehicle production and supply chains worldwide. would harm.
He said Beijing would take all necessary measures to “firmly protect” its rights and interests.
What has the German government said?
It’s not happy. Not only do automakers face competition at home, but a looming trade war will be a blow to exports to China.
“The European Commission’s punitive tariffs affect German companies and their top products,” said German Transport Minister Volker Wissing.
China is an important market for German carmakers – especially Volkswagen, Europe’s largest carmaker, which has a joint venture with SAIC.
Olaf Scholz, the chancellor, has noted that half of the electric vehicles imported from China were produced by Western manufacturers.
What have German carmakers said?
After the EU’s announcement, Volkswagen said it had rejected imposing the duties.
“The negative effects of this decision outweigh the potential benefits for the European and especially the German car industry,” a Volkswagen spokesperson said.
The German automotive industry association VDA said it was in favor of “free and fair trade”.
Mercedes-Benz CEO Ola Källenius added his voice to the concerns, saying that “what we don’t need as an exporting nation are increasing trade barriers.”
And what about other manufacturers?
Sweden’s Volvo said it is “analyzing” the developments in the study, Opel owner Stellantis said it “does not support measures that contribute to the fragmentation of the world” and Chinese EV maker Nio said that “this approach will undermine global environmental protection, hinders rather than promotes greenhouse gas emissions. reduction and sustainable development”.