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EK announces tariffs on electric vehicles manufactured in China, reactions were swift

The European Commission is planning to introduce import duties on electric cars manufactured in China with state support. The duties vary for different automakers and companies, ranging from 17.4% to 38.1%. The Commission officially announced this preliminary information on Wednesday, June 12. China’s response was swift, and European automakers, ironically, warned against import duties into the EU as the Chinese market is crucial for them, with many having manufacturing plants there.

In September of last year, the Commission announced that it was investigating Chinese state subsidies in the electric car sector. According to their initial assessment, these subsidies allowed and continue to allow artificially low prices for locally manufactured vehicles, distorting the market and creating a competitive advantage. Paradoxically, European automakers were surprised that such a plan was not adequately consulted with them.

The result of the investigation is already known. The Chinese state support is, in simplified terms, deemed unfair according to the investigation’s conclusion, benefiting automakers producing their cars in China. It is worth noting that the import duties do not only apply to Chinese automakers.

„When our partners break the rules, we will enforce our rights,“ stated Valdis Dombrovskis, European Commissioner.

As mentioned earlier, import duties vary depending on the automaker or company. The highest import duties are to be imposed on the SAIC group (formerly Shanghai Automotive Industry Corporation), which includes popular brands like MG in the domestic market, at a rate of 38.1%. Geely will face a 20% duty, and BYD 17%.

Import duties will also affect Western car brands. Tesla, Dacia, and BMW will face a 21% import duty. The duties are expected to come into effect on July 4, 2024, but this is currently just a preliminary information from the Commission.

According to sources familiar with the situation, the Commission’s intention is to initiate a dialogue with Chinese counterparts. This could potentially change the amount of duties. A final decision is expected to be made no later than November of this year.

China reacted almost immediately to the preliminary information in the expected manner. Chinese representatives stated that the EU is using trade as a weapon and that this act would strongly affect mutual relations and future cooperation. Similarly, EU representatives stated that they will enforce and defend their interests, calling on the Commission to engage in dialogue.

It remains a fact that China has invested significantly more in clean mobility in recent years than the EU, which has lagged behind in developing the entire market and necessary infrastructure.

In the past year, 19.5% of electric cars sold in the EU came from China, as reported by Euractiv. This figure includes Western brands. This year, further increases in sales are expected for automakers like BYD or MG.

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