EU increases its tariffs on Chinese electric vehicles 

The EU has increased tariffs on Chinese electric vehicles (EVs) as part of efforts to safeguard the bloc’s automotive industry. These new tariffs, which range from 17.4% to 37.6% for certain manufacturers, add to an existing 10% duty on all electric cars imported from China. 

This tariff hike is expected to elevate EV prices across the EU, potentially making them less affordable for European buyers.

This development is a setback for Beijing as it’s already embroiled in a trade conflict with Washington. The EU is China’s largest overseas market for electric vehicles, and the Chinese government is relying on high-tech exports to boost its struggling economy.

EU officials argue that the surge in Chinese EV imports has been driven by “unfair subsidisation,” enabling these vehicles to be sold at prices much lower than those produced within the EU. China, however, denies these allegations, maintaining that it is not subsidising excess production to flood Western markets with inexpensive imports.

Although the EU’s action may seem modest compared to a recent US decision to increase tariffs to 100%, it could have a more substantial impact given the higher prevalence of Chinese EVs in Europe compared to the US.

According to the Brussels-based green group Transport and Environment (T&E), the market share of Chinese EVs in the EU grew from 0.4% in 2019 to nearly 8% last year. 

The Chinese EV brand SAIC faces the highest new tariff at 37.6%. SAIC, a state-owned company, partners with Volkswagen and General Motors and owns MG, which produces the popular MG4 EV in Europe.

The tariff increase will also affect Western companies manufacturing cars in China. For instance, Geely, which owns Sweden’s Volvo, will see an additional tariff of 19.9%. Spanish bank BBVA notes that Geely will continue exporting to the EU profitably, though its profits will be significantly reduced.

European car makers operating in China or through joint ventures will also face higher costs to import EVs into the EU. Companies cooperating with the EU probe will incur a 20.8% duty, while those deemed uncooperative will be subjected to the maximum tariff of 37.6%. 

Tesla, the largest exporter of Chinese-made EVs to Europe, has requested an individually calculated rate, which EU officials will determine at the end of the investigation. Meanwhile, Tesla has indicated on its European websites that prices for its Shanghai-made Model 3 may rise due to the new tariffs.

The new tariffs, which are provisional and subject to an ongoing investigation into Chinese state support for its EV manufacturers, will take effect this week. They are unlikely to be finalised until later this year.