The European Commission has proposed up to 40 per cent tariffs on imported Chinese EVs

The European Commission has provisionally concluded that it intends to impose tariffs on Chinese-built electric cars imported into the region, if negotiations with the Chinese authorities can’t fix the problem. Er, the problem being that EU electric carmakers are allegedly feeling threatened by Chinese imports.

As part of an ongoing investigation, the Commission believes Chinese EV producers are benefitting from subsidies in its supply chain, instigated by the Chinese government. In turn, it reckons the financial help enables them to keep their prices artificially low. The knock-on effect means ‘European producers feel threatened’ because they can’t match the price and still make a profit.

Cited from a number of carmakers the report has studied, the Commission said BYD would need to pony up 17.4 per cent extra (ouch), while the tariff applied to SAIC could be almost 40 per cent of the price of the vehicle (double ouch).

The Commission has calculated there would be an average 21 per cent tariff for those cooperating with its investigation and a whopping 38.1 per cent tax to be applied to those not playing ball.

The additional duties are expected to be implemented from 4 July if discussions over the next couple of weeks fail, and run for an initial six-month period. Such costs would eventually be borne by consumers (but of course) and the wave of cheaper EVs on the market would diminish. But the European manufacturers TopGear.com contacted aren’t particularly happy about the Commission’s suggestion.

A spokesperson for VW said: “Countervailing duties are generally not suitable for strengthening the competitiveness of the European automotive industry in the long term – we reject them. The timing of the EU Commission’s decision is detrimental to the current weak demand for BEV vehicles in Germany and Europe.

“The negative effects of this decision outweigh any potential benefits for the European and especially the German automotive industry. Volkswagen Group stands for an open and rules-based trade policy. We have confidence in our products and in our ability to innovate.”

It’s likely some carmakers are worried that if tariffs are implemented in Europe, China will respond in kind – applying tariffs to European imports. That said, in 2023 Chinese imports to the EU were worth almost £8.5 billion (€10bn) from a total of 438,000 cars, where the value of the 11,499 European EVs to the Chinese market didn’t quite total a billion (£712 million approx), according to figures from the European Automobile Manufacturers’ Association (ACEA).

Mike Hawes, SMMT Chief Executive, said: “We note the European Commission’s decision to impose provisional duties on Chinese-built EVs in a matter of weeks. We will monitor carefully for any adverse impact on the UK market and domestic manufacturers as we await the findings and definitive measures.

“Free and fair global trade has driven the UK’s success as one of the world’s leading automotive markets and exporters. Securing our own competitiveness is, therefore, our most immediate priority, and we look to whoever forms the next government to deliver a long-term strategy, supporting a vibrant market and manufacturing base, that allows the sector to thrive on a level playing field.”

Meanwhile, Stellantis – parent company to Citroen, Peugeot and Vauxhall, among others – said: “As a global company, Stellantis believes in free and fair competition in a worldwide trade environment and does not support measures that contribute to the world fragmentation. Stellantis will study today’s announcement that would come into effect on 4 July 2024 at the latest, when the Commission would publish in the Official Journal a regulation explaining in detail the provisional findings which led to the level of the duties.

“In this context, Stellantis will leverage its unique competitive advantages. Firstly, its 51:49 joint venture with Leapmotor that holds manufacturing rights for Leapmotor outside of China, and could benefit from the existing diverse Stellantis footprint in Europe. Secondly, the Citroën ë-C3, which is made in Europe and whose price point starts below 20,000 euros for a pure EV, and able to compete with Chinese products.

“Stellantis is agile to adapt and take advantage of any scenario and today’s tariff announcement will not deter our overall strategy with respect to Leapmotor in Europe, as we have taken this potential development into account.”

In May, the US government applied steep tariff increases on various Chinese commodities, such as EV batteries, semiconductors, critical minerals and electric cars, in a bid to protect American manufacturers. Whether the Commission will do similar in Europe will be seen in the next few weeks. More as we get it.