The EU’s five-year tariffs of up to 35.3% on battery electric vehicles (BEVs) made in China will finally come into force on October 31, according to a press release from the European Commission published yesterday.
In this decision, the EU followed the United States, which in May increased import duties on all Chinese electric vehicles from 25% to 100%. Therefore, the decision of the Europeans is not only economically important, but also politically important.
To make a decision on tariffs in the EU, they had to have the support of at least 15 of the 27 EU countries, representing 65% of their population. Hungary voted against the introduction of duties on Chinese electric cars in the EU.
In early October last year, the EU institution launched an investigation to combat subsidies on BEV imports, analyzing whether value chains in China receive illegal subsidies and whether such subsidies could cause economic harm to BEV manufacturers. in the EU. The European Commission demanded that Chinese manufacturers provide it with convincing data on the real cost of electric vehicles. European inspectors visited more than 100 car factories across China.
The investigation, which concluded that the BEV value chain received unfair subsidies in China, was closed by the Brussels body on Tuesday, October 29 with the imposition of countervailing duties on imports of battery electric vehicles from China. Customs duties will be in place for five years, in addition to the standard 10% import duty imposed by the European Union on imported cars.
This duty to protect the EU internal market aims to prevent the sale in the European Union of cheap electric vehicles produced with alleged state support from China. Sales of Chinese-made electric vehicles grew in the European electric vehicle market from 3.9% in 2020 to 25% in September 2023, according to the European Commission.
The three Chinese manufacturers investigated by the European Commission are subject to individual tariffs: BYD with 17.0%, Geely with 18.8% and SAIC with 35.3%. Other Chinese electric vehicle companies that cooperated in the EU investigation face an average tariff of 20.7%. All other Chinese manufacturers that did not cooperate in the investigation are subject to a 35.3% duty. The exception was American Tesla electric cars produced in China, for which the European Commission reduced the tax to 9%.
The EU and China will continue to work to find alternative WTO-compatible solutions that effectively address the problems identified by the anti-subsidy investigation, the Brussels body said in a press release.
French, Italian and Spanish car manufacturers supported the introduction of duties. However, the Association of the German Automotive Industry (VDA) harshly criticized Brussels’ decision. German car manufacturers fear retaliation from China. VDA management believes that the risk of a “wide-ranging commercial conflict” will increase.
German carmakers fear retaliatory tariffs will be imposed on conventional cars with gasoline and diesel engines. This type of Chinese-made car is not competitive in the European market. However, Chinese electric cars have begun to seriously squeeze European manufacturers in the EU market. Beijing has already made it clear that it can impose duties on European cars with a displacement greater than 2.5 liters.
It is known that the main Chinese manufacturer of electric vehicles, the BYD conglomerate, ordered a total of eight special vessels for the transport of vehicles, ro-ro vessels, from China’s shipyards, capable of transporting approximately 7,700 vehicles abroad in a single trip. . Other Chinese manufacturers can use the services of the Chinese shipping company Cosco, which has ordered a total of 29 ro-ro vessels. To a large extent, these vessels will have to serve for maritime transport to Europe.
