The European Union imposes particularly strict customs duties on electric cars imported from China. Electric cars are the latest flashpoint in a broader industrial dispute over Chinese government subsidies and Beijing’s green generation exports to the 27-nation bloc.
The higher bills went into effect on Friday, pending a final resolution in four months.
Below are some key facts about the EU’s planned tariffs:
What has the European Union done?
After an eight-month investigation, the European Commission, the EU’s executive body, found that corporations making electric cars in China were receiving gigantic government aid that allowed them to close the gap with their EU competitors, grab a gigantic share of the market and threaten European jobs. . .
The accrual of payments was announced on June 12 and went into effect on Friday. The tasks are provisional, meaning they will be totalled but will not need to be paid for until they are shown by a vote of EU governments by 2 November. Without them, the automotive industry would have suffered great damage.
This gives the EU and the Chinese government time to negotiate. Discussions were held between Valdis Dombrovskis, the European Commissioner for the Economy, and Chinese Trade Minister Wang Wentao, as well as technical experts.
The backlog of tasks is not a goal in itself, but it is “a means to correct an imbalance,” Commission spokesman Eric Mamer said on Thursday. “We hope to achieve a solution that allows us not to have to move forward on this path. “
The rates, if applied, would be: 17. 4% for BYD cars, 19. 9% for Geely cars and 37. 6% for cars exported through the Chinese state-owned SAIC. Geely owns brands such as Polestar and Volvo in Sweden, while SAIC owns Britain’s MG, one of the best-selling electric vehicle brands in Europe. Other electric vehicle manufacturers in China, adding Western corporations such as Volkswagen, BMW and Tesla, would face price lists of at least 20. 8%. The commission indicated that Tesla could simply take advantage of an “individually calculated” tariff if customs duties were imposed permanently.
Under EU rules, it is conceivable – although ultimately unlikely – that premium price lists will be blocked before the November 2 effective date by a vote of what the EU calls a “qualified majority” of countries. At least 15 of the EU’s 27 member governments make up at least 65% of the bloc’s population.
Why did he do the act?
Electric cars made in China rose from 3. 9% of the EV market in 2020 to 25% in September 2023, the commission said, partly thanks to unfair price undercutting in the European industry.
The commission says Chinese corporations have achieved these subsidies along the production chain, from reasonable land for local government factories to below-market lithium materials and batteries from state-owned corporations, tax breaks and financing at lower interest rates. of state-controlled banks.
The immediate expansion of market share has raised fears that Chinese cars could ultimately threaten the EU’s ability to produce its own green generation needed to fight climate change, as well as the threatened jobs of 2. 5 million. of employees in the automobile industry and another 10. 3 million people. whose jobs depend on the production of electric vehicles.
Subsidized solar panels from China have wiped out European manufacturers, a delight that European governments do not need to repeat with their car industry.
Unusually, the commission acted alone, without any court case from the European car industry. Industry leaders and Germany, home to BMW, Volkswagen and Mercedes-Benz, are skeptical of the subsidy investigation. This is because many of the cars that will be affected price lists are drawn up through European corporations and China may simply retaliate against the car industry or in other areas.
How do EU price lists compare to those advertised through the US?What is the U. S. ?
The Biden leadership is expanding the price lists of Chinese electric cars to 100 percent, from the current 25 percent. At this level, US customs duties block virtually all Chinese imports of electric cars.
This is what Europe intends to do.
EU officials need imported affordable electric cars to meet their goals of reducing greenhouse fuel emissions by 55% by 2030, but without the subsidies that EU leaders consider unfair competition.
The planned price lists are intended to point the gambling box through coming on the extent of over the top or unfair subsidies enjoyed through Chinese automakers.
European countries also subsidize electric cars. The question in industrial disputes is whether subsidies are fair and should be received by all car manufacturers, or whether they distort the market in favor of one party.
How cheap are Chinese electric vehicles?
Chinese automakers have learned how to make electric cars more cost-effectively amid a fierce price party in the world’s largest auto market.
BYD’s Seal U Comfort style sells for 21,769 euros ($23,370) in China and 41,990 euros ($45,078) in Europe, according to figures from Rhodium Group. The entry-level model of BYD’s compact Seagull, which is expected to arrive in Europe next year, sells for around $10,000 in China.
What does this mean for European drivers and manufacturers?
It’s unclear what effect these taxes will have on car prices. Chinese automakers are able to make some cars so profitably that they can simply absorb price lists in the form of lower profits rather than raising prices.
While consumers may gain advantages from less expensive Chinese cars in the short term, allowing unfair practices may in the end mean fewer festivals and higher costs in the long term, the commission says.
Currently, Chinese automakers sell their cars in Europe at much higher costs than the same cars in China, which means they prioritize profits over market share, even taking into account their recent gains in the market. According to the Rhodium Group’s calculations, five of the six BYD models would still generate profits in Europe, even with a 30% tariff.
The concern in Europe is that Chinese competition will resort to costs closer to those that qualify in China and gain an even larger share of the market.
How will China react?
Beijing sharply criticized the accumulation of price lists when they were announced, calling them an “absolute act of protectionism. “
On Thursday, He Yadong, a spokesman for China’s Ministry of Commerce, said the two sides had held several rounds of technical consultations and noted that a final resolution through the EU would be taken in four months.
“We hope that the European aspect and the Chinese aspect will move in the same direction, show sincerity, speed up the consultation procedure and achieve a mutually appropriate solution based on facts and regulations as soon as possible,” he said at a weekly briefing. . press conference in Beijing.
He also said China hopes the EU will pay serious attention to the voices of European automakers and governments who have spoken out against price lists and anti-subsidy measures that would harm cooperation between the Chinese and European auto industries.
It is not yet clear what the agreement will look like. One solution might be to simply agree on minimum costs for Chinese cars.
China could simply retaliate by opposing European products such as red meat or brandy imports, or by opposing European imports of luxury cars.
In the longer term, Chinese automakers could limit themselves to drawing up price lists through production cars in Europe. BYD is building a factory in Hungary, while Chery has a joint venture to manufacture cars in Spain’s Catalonia region.
McHugh and Moritsugu write for the Associated Press.
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