Graphics: EU tariffs hike on Chinese EVs to harm mutually beneficial cooperation

The European Commission (EC) has imposed additional tariffs of up to 37.6 percent on imported Chinese electric vehicles (EVs) effective from Friday, on top of the standard 10-percent car duty.

SAIC, Geely and BYD are leading Chinese EV manufacturers in the European market. The individual duties, which the EC would apply to the three sampled Chinese producers, would be 37.6 percent, 19.9 percent and 17.4 percent respectively.

Chinese EV producers that cooperated in the EC investigation, but have not been sampled would be subject to the weighted average duty of 20.8 percent. All other Chinese EV producers would be subject to the duty of 37.6 percent.

The Chinese Ministry of Commerce (MOC) on Thursday repeatedly expressed strong opposition to the EU's anti-subsidy probe into Chinese EVs, and emphasized the importance of dialogue and consultation in addressing economic and trade frictions.

"China has noticed that governments of some EU member states and major automobile companies have repeatedly voiced opposition to the EU's anti-subsidy measures against Chinese EVs," said He Yadong, the MOC spokesperson.

He added, "China hopes that the EU will listen to the voices within the bloc, carry out negotiations with China rationally and pragmatically, and avoid countervailing measures that harm the mutually beneficial cooperation and shared growth of Chinese and European auto industries."

The provisional duties sparked backlash from various business sectors. Such measures heavily infringe upon the principle of free trade, which is also propagated by the EU, said BMW chief Oliver Zipse.

"The negative effects of this decision outweigh any benefits for the European, and especially the German, automotive industry," said spokesperson with Europe's largest carmaker Volkswagen in a statement on Thursday.

The provisional duties, slightly adjusted from earlier pre-disclosed rates, have a maximum duration of four months, and a final decision will be taken on definitive duties within the timeframe. Intensive talks between China and the EU are expected to continue.

Before 2020, China's new energy vehicle exports relied heavily on the Asia market, with EV exports to Asia accounting for about 90 percent. In 2022, China's EV exports to Europe led other regions, accounting for nearly half of all exports.

About 50 percent of the EU's imported EV from China are European and American brands that produce vehicles in China. According to KPMG, Chinese EV brands only took less than 10 percent of market shares in Europe in 2022.

"The European anti-subsidy tariffs would not only affect Chinese manufacturers, but also European companies and their joint ventures in particular," said German Association of the Automotive Industry in a statement on Wednesday.

Among the top five Chinese brands in Europe, Geely doesn't directly sell cars in Europe, but part-owns Volvo and Polestar, while SAIC wholly owns MG and MAXUS. BYD sells cars directly in Europe.

A 20-percent tariff would result in a 25-percent decline in EV imports from China, impacting Western automakers with operations in China, according to a simulation study of the Kiel Institute for the World Economy.

"It does not strengthen the competitiveness of European manufacturers," Zipse stressed, adding that it not only harms the business model of globally active companies, but also limits the supply of electric cars to European customers and slows down decarbonization in the transport sector.

The additional tariffs are expected to ignite soaring prices for EVs in Europe, an impediment to fulfill the European Green Deal, which slated to phase out the sale of internal combustion engine vehicles from 2035.