The European Union will impose additional provisional duties of up to 38 percent on Chinese electric cars from Friday after concluding manufacturers in China benefited from unfair state support.
Here's why the Chinese electric vehicle market has raised hackles among European policymakers -- and what impact the move could have:
How did China's EV sector get so strong?
China has spearheaded a targeted industrial strategy to boost its EV sector, pouring vast state funds into domestic firms as well as research and development.
Between 2014 and the end of 2022, the Chinese government said it had spent more than 200 billion yuan ($28 billion) on subsidies and tax breaks for EV purchases alone.
The approach has given Chinese firms a critical edge in the race to provide cheaper, more efficient EVs over leading European automakers, which have not always enjoyed such state largesse.
They have also been boosted by surging domestic demand: Of all new EVs sold globally in December last year, 69 percent were in China, according to the research firm Rystad Energy.
Exports are soaring. According to the Atlantic Council, Chinese sales of EVs abroad rose 70 percent in 2023, reaching $34.1 billion.
Almost 40 percent went to the European Union, the largest recipient of Chinese EVs.
The EU market share of Chinese-made EVs climbed from around three percent to more than 20 percent in the past three years, according to the European Automobile Manufacturers' Association.
Who are the key players?
The overwhelming market leader from China is BYD, which this year posted record annual profits for 2023 and says it aims to be among the top five car companies in Europe.
Last year, it became the first manufacturer to pass the five million milestone in terms of hybrids and all-electric vehicles produced, cumulatively -- crowning itself as "the world's leading manufacturer of new energy vehicles".
Among the other top Chinese EV makers exporting to Europe are SAIC, MG Motor and Polestar -- owned by Volvo and its Chinese parent firm Geely -- according to state media.
Why is the EU worried?
The surge in exports has allowed Chinese firms to rapidly increase their share of the EU market for EVs.
The EU has now concluded that Chinese manufacturers benefited from "unfair subsidisation, which is causing a threat of economic injury" to European automakers.
But there is also dissent within the EU -- Germany, a major trade partner whose car market is heavily reliant on China, warned tariffs would harm German companies.
The EU will now impose provisional duties between 20 and 38 percent on top of the current 10 percent tariff on Chinese electric cars.
Definitive duties will take effect in November for a period of five years, pending a vote by the EU's 27 states.
How has Beijing reacted?
Beijing has yet to react but a Chinese trade group condemned the bloc's "protectionism".
China has already bared its teeth however, kickstarting an anti-dumping investigation into pork imports from the EU, threatening Spanish exports.
In January, China launched an anti-dumping investigation into brandy imported from the EU, in a move seen as targeting France, which had pushed for the commission's probe.
Beijing said in June it "reserves the right" to file a case with the World Trade Organization over the EU tariffs.
How have car manufacturers reacted?
Since the EU's move will impact all Chinese-made electric cars, Tesla's Model 3, the electric Mini, and the Volvo EX40 are also among the vehicles that will face higher duties.
A Tesla spokesperson said prices for the Model 3 -- the number three in electric car sales in Europe -- should increase "in the short term".
China's electric car makers Nio and XPeng told AFP they had no plans to quit the European market after the announcement.
Meanwhile, MG France said it already imported 2,600 electric vehicles from China that have cleared customs.
What impact will the tariffs have?
Germany's Kiel Institute for the World Economy, alongside Austrian institutes, predicted the higher taxes will reduce vehicle imports from China by 42 percent.
Electric car prices could rise by an average of 0.3 to 0.9 percent in the EU, they added.
Cui Dongshu, secretary-general of the China Passenger Car Association, said costs for Chinese exporters of EVs and EU consumers would increase, and the duties would also hit the bloc's energy conservation and green development goals.
© 2024 AFP
20 Comments
Peter Neil
i’ll bet money is involved.
Pukey2
Because they realized no one else was really serious about doing something to combat pollution in cities and carbon emissions from vehicles. And they worked hard. Just look at the other forms of green energy. China is the leader in all of them. Next, we'll be hearing how China is over-combatting climate change. China produced more solar panels last year than USA has done in its entire history. Bad bad bad China.
TokyoLiving
China's EV industries are unstoppable..
GO CHINA !!..
Norm
China making its junk and then dumping its junk in other markets. It’s a junk-o-rama.
bass4funk
Hmmm…
https://www.goldmansachs.com/intelligence/pages/why-are-ev-sales-slowing.html
quercetum
Successful. Biden and billions into the semiconductor chip industry. Biden learning from China.
quercetum
EU knows that China isn’t subsidizing the production of EV cars. Otherwise, either Chinese brands would be siginificantly cheaper than Tesla, which is also made in China; or Tesla is also subsidized but Elon kept silent about it. The subsidy to EV cars did exist, and is no longer the case in 2023.
EU knows that China isn’t subsidizing the production of EV cars. This proposal was brought up by France, because French car manufacturers are falling behind, while German car makers are trying to cooperate with Chinese brands.
Fighto!
Gotta love the globalists on here who believe it is perfectly acceptable for the CCP to produce and dump products in markets - at cheap, subsidised prices - with the intention of obliterating the local industry.
If it is "protectionism" - then good on the EU for protecting their industries and jobs. The globalists who promote unfettered "free trade" need to admit that a Communist dictatorship with zero human or workers rights has already destroyed so many industries worldwide - flooding the world with shoddy goods that are soon in landfill.
Sh1mon M4sada
...and you believe the CCP.???
https://www.cnbc.com/2024/06/21/china-spent-230-billion-to-build-its-electric-car-industry-csis-says.html
Seriously, this^^, is what can be found. It's more likely much more than $230 billions.
The CCP has buggered up what ever it touches in China, do you want to let them bugger up auto in your country? This is mass market distortion, done at wholesale level, politically driven, and an end game of destruction.
Keep them out!!!
Look at how many Chinese EV companies has gone broke, look at Chinese property, Chinese equities, fintech....all buggered!!!
tora
You obviously shop at the dollar shop or equivalent. Have you even seen the latest tech and quality coming out of China? Or its cities? I am also guessing you watch a lot of CNN et al for your daily news fix.
This kind of narrative sounds similar to what people used to say about stuff coming out of Japan in the 80s.
isabelle
China cares nothing about climate change. Its green tech/EVs are nothing more than a strategic move to dominate these industries, influence geopolitics and increase the power of the CCP.
Making solar panels and EVs isn't "green" when you're powering your industry by building six times more coal plants than the rest of the world combined:
https://www.npr.org/2023/03/02/1160441919/china-is-building-six-times-more-new-coal-plants-than-other-countries-report-fin
This comment is the exact opposite of what the EU has formally stated.
I know which of you I believe.
deanzaZZR
Lie is a 3 letter word as are some Washington funded agencies. Just saying.
https://www.carbonbrief.org/analysis-clean-energy-was-top-driver-of-chinas-economic-growth-in-2023/
ian
What you quoted says the 28billion was for subsidies and tax breaks alone, notthe same expenditures as the 230billion. Key points from linked cnbc article
BackpackingNepal
If EU accepts petrol from Middle East, why not EV from China
Ramsey's Kitchen
China making its junk and then dumping its junk in other markets. It’s a junk-o-rama.
Nobody is forcing you or anyone else to buy a Chinese car. But many other consumers would prefer to have a choice of cheaper cars, especially these days when prices of everything have gone through the roof. Guess US/EU are champions of " free trade" only when it suits them.
Ramsey's Kitchen
And they worked hard. Just look at the other forms of green energy. China is the leader in all of them. Next, we'll be hearing how China is over-combatting climate change. China produced more solar panels last year than USA has done in its entire history. Bad bad bad China.
Exactly.
TaiwanIsNotChina
Is China still building coal plants? Why yes, yes they are.
Agent_Neo
What Chinese products have in common is that they are cheap and reasonably usable.
However, no one wants to drive something like an EV where safety measures are directly related to life. It may be that the EU didn't like it because it sold quite well in Europe.
It's clear that the Chinese Communist government doesn't care about environmental issues.
Mainland China has become a veritable exhibition center for environmental pollution, with air, ocean, and soil pollution, but the Chinese think they can do whatever they want as long as they make money, and they even go so far as to export environmental pollution.
I wonder if in the future they will start saying this?
"If you want us to stop polluting the environment, give us money!!"
Pukey2
China used to produce cheap goods because that's what the West wanted. However, they have now shifted to high quality goods, electronics, EVs, etc. No wonder some scatterbrain in the US wanted Chinese students to study humanities and reserve STEM subjects at university for Indian students.
Will USA and its minions ever stop with this Tonya Harding method, and compete using hard work instead?
isabelle:
Please, stop it with these Fu Manchu hysterics.
TaiwanIsNotChina
Will China ever stop stealing technology? There is your answer.