Chinese electric cars may be more expensive, high EU duties on the way

This article was last updated on June 12, 2024

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Chinese electric cars may be more expensive, high EU duties on the way

The European Commission will impose high import duties on electric cars imported from China from next month. Various levies have been imposed on the three major manufacturers BYD, Geely and SAIC. The brands may choose to pass on these charges to buyers, making the cars more expensive.

The Commission announced an investigation last October and concluded on the basis of the results that there is unfair competition, because Chinese car brands receive a lot of state aid. The Commission has contacted the Chinese authorities about this.

Chinese brands that participated in the research will pay the average of 21 percent, brands that did not want to participate will pay 38.1 percent. Teslas produced in China may receive a separate tariff.

Different rates will apply to these three brands. Geely owns Volvo, Polestar and the Chinese Lynk & Co, among others. SAIC owns the British MG:

Import duties for three major brands

Europe is not the first competitor to introduce these types of levies. Last month, Washington reported that Chinese cars imported into the US will face an even higher tariff, rising from 27.5 to 100 percent.

‘Unfair competition’

European car brands are eyeing the Chinese electric car market with suspicion. They do not yet have a real foothold, NOS reported in February, but the car brands are trying hard to achieve that. The market share is growing, also because the prices of Chinese cars are in many cases much lower than cars made in Europe.

Chinese car brands therefore receive state aid for production. Their European competitors have long made it a point that this leads to unfair competition. The European Commission now agrees.

According to business newspaper the Financial Times, Spain and France in particular are said to have lobbied for these levies in Brussels. Germany, Sweden and Hungary are opposed, fearing that China will take retaliatory measures.

China correspondent Sjoerd den Daas:

“Chinese car brands are rapidly gaining market share, from less than half a percent in 2019 to almost 8 percent of the electric car market last year. If you add European car makers that produce in China, you are at 20 percent.

Just as Beijing envisioned it when it transformed the sector into one of the new economic growth giants almost ten years ago with ‘Made in China 2025’. In addition to solar panels and wind turbines, electric cars from the People’s Republic were also expected to conquer the world.

These plans have led to enormous investments in production capacity, partly driven by state funds and tax incentives. But production precedes demand: as in many industries, overcapacity is large.

Beijing has repeatedly said that China’s successes in the auto industry are the result of strong competition in its home market, which has ensured that anyone can buy an affordable electric car for little money. But Beijing does not say that the companies were able to grow so quickly because foreign car makers in China were forced to set up joint ventures with companies from the People’s Republic.

The announced levies will partly shatter the Chinese dream on the European car market, and it could be difficult, especially for the brands that face the highest levies. The damage to the Chinese export engine could amount to many billions of euros.

The question now is what kind of retaliatory measures China will respond to this. It seems certain that they will come. The Chinese Minister of Commerce said he will do everything he can to safeguard the interests of Chinese companies if Brussels decides to ‘suppress’ its companies. Chinese state media have already threatened investigations and possible tariffs on, among other things, pork and dairy from Europe.”