FYI: The EU revises proposed tariffs on Chinese electric vehicles, aiming to level the playing field while giving Tesla a significant advantage.
EU Lowers Proposed Import Duties for Chinese EVs, Set to Vote in October
The European Union has revised its proposed import duties for Chinese electric vehicles (EVs), a move that will be voted into law in October if approved by at least 15 of the 27 member states. The revised duties could substantially benefit Tesla, which will see tariffs on its China-built vehicles drop from 20.8% to 9%.
The Context: Efforts to Curb Influx of Chinese EVs
In July, the EU provisionally adopted new import duties aimed at stemming the anticipated flood of affordable Chinese-made EVs. Initially, the EU planned to impose duties as high as 37.6% on top of the existing 10% import tax for Chinese cars. However, the revised proposal has lowered this figure to a maximum of 36.3%. These tariffs are thought to reflect the level of state subsidies Chinese manufacturers receive, which the EU views as unfair competition tactics.
Specifics of the Tariffs: Who Gets What
- Tesla: Reduced from 20.8% to 9%.
- BYD: Imposed at 17%.
- SAIC (MG brand): Full 36.3%.
- Geely (Volvo owner): Additional 19.3%.
Tesla benefits from the lowest tariff due to minimal Chinese state subsidies, as per EU assessments. Other manufacturers will face varying tariffs ranging between 17% and 36.3%, depending on their level of subsidization.
Impact on Chinese Car Sales
Despite the duties only being provisional, they are already impacting Chinese EV sales in Europe. SAIC experienced a 45% sales drop in July compared to the preceding month. However, a general 36% decrease in EV sales across Europe’s 16 largest markets suggests broader market factors are also at play.
Year-over-year data shows some Chinese manufacturers still performing well. BYD, for instance, has posted a 20% increase in sales within the EU for 2024 compared to 2023. However, the rising duties could force companies like BYD to raise their vehicle prices, potentially diminishing their current market advantage.
Market Reactions and Future Prospects
The market is yet to fully absorb the impacts of the new tariffs. Chinese manufacturers currently maintain significant markups on their vehicles, enabling them to navigate some of the tariff-induced price increases. However, if these duties are enforced officially, Chinese automakers might consider localizing production within Europe to sidestep the tariffs. Companies like BYD are already setting up factories in Hungary and Turkey, while Dongfeng is eyeing Italy for potential facilities.
Divergent Views Among EU Member States
The proposal to implement new duties has not garnered unanimous support. At least 15 member states need to approve the new tariffs for them to become law. Proponents include France, Spain, and Italy, while Germany, Sweden, and Finland have abstained from voting.
Conclusion
The final decision regarding the new tariffs will be made in October. If adopted, these duties are poised to redefine the landscape of the EV market in Europe, potentially ushering in a more competitive environment for domestic and foreign automakers alike. For ongoing updates and insights on this evolving situation, follow us at @automotivefyi or reach out at tips@automotive.fyi.
William Kouch, Editor of Automotive.fyi
