EU Tariffs On Chinese EVs Come Into Force

The European Union’s higher tariffs on certain Chinese electric vehicle (EV) manufacturers have kicked in, as of Thursday 4 July 2024.

The EU announced in June it was planning to institute higher EV tariffs of up to 37.6 percent on Chinese imports while it completes its investigation into allegedly excessive and unfair subsidies. This was to be on top of a 10 percent duty that was already in place for all electric cars imported from China.

It comes after the Biden Administration and the US Commerce Department in May had announced new tariffs of up to 100 percent on a number of Chinese goods, including EVs, which they said were designed “to protect American workers and businesses from China’s unfair trade practices.”

EV tariffs

The European Union investigation had provisionally concluded that the battery electric vehicles (BEV) value chain in China benefits from unfair subsidisation. Its investigation also examined the likely consequences and impact of measures on importers, users and consumers of BEVs in the EU.

The EC said it will impose the following individual duties on three Chinese EV makers, based on estimates of how much state aid each firm received from Beijing:

• BYD: 17.4 percent;
• Geely: 20 percent;
• SAIC: 37.6 percent.

Provisional tariffs on Chinese EV imports to the bloc have therefore begun to apply from Friday, after the two sides failed to reach an agreement on what the EU executive called “unfair” subsidies from Beijing.

This will likely raise the price of EVs for consumers in Europe and elsewhere, making them even more unaffordable.

Reuters noted that Chinese brands MG and Nio have suggested they might raise prices later this year.

EU production?

It could also spell the end of certain Chinese brands from the European market. SAIC for example is the Chinese owner of the formerly British brand MG, which produces one of the top-selling EVs in Europe, namely the MG4.

Geely meanwhile owns Sweden’s Volvo and is subject to tariffs of up to 20 percent.

There is speculation that the EU tariffs will led to certain Chinese EV manufacturers opting to construct production capabilities in the European Union in an effort to bypass or mitigate the EU tariffs.

BYD’s is already constructing its first European factory in Hungary, and Chinese EV maker Chery, recently signed a joint-venture deal with a Spanish firm to begin making EVs and other types of cars in Barcelona.