EU Confirms Decision to Increase Import Tariffs on Electric Cars from China
European Union (EU) confirmed on Thursday its decision to raise import tariffs on electric cars from China, prompting a car manufacturer to issue a warning that it may have to raise prices as a result. The EU’s executive arm, the European Commission, concluded in an investigation that Chinese battery electric vehicle producers have benefited from “unfair” subsidies and announced such tariff plans in June. On Thursday, European regulators confirmed that these tariffs will take effect on Friday, with the rates slightly adjusted to range from 17.4% to 37.6%. These tariffs will impact car manufacturers ranging from Chinese giant BYD to European brands that may produce cars in China, and even American giant Tesla, which has a factory in Shanghai.
The EU’s decision comes as Chinese car manufacturers are aggressively expanding into Europe with competitive prices, posing a threat to top car manufacturers in the region, many of whom are lagging behind in electric vehicles. The European Commission stated that these car manufacturers have benefited from “unfair subsidies.” Car manufacturers have already retaliated against the tariffs. Chinese electric car manufacturer Nio stated on Thursday that it is currently maintaining the prices of its cars sold in Europe, but added that “price adjustments cannot be ruled out in the future due to the imposition of these tariffs.” A spokesperson for another Chinese electric car newcomer, Xpeng, stated on Thursday that customers awaiting delivery of cars or those placing new orders before the tariffs take effect will be “exempt from any price increases.” The company did not comment on whether it will raise prices due to the imposition of these tariffs. Geely declined to comment when contacted by CNBC. When the EU announced the tariffs for the first time last month, Tesla stated that it may raise the prices of its Model 3 cars in Europe. The EU has not specified the specific tariff level that Tesla will face, but stated last month that the American carmaker “may receive individually calculated duties.”
China-EU Negotiations
The tariffs taking effect on Friday are temporary and will last for four months. By then, EU member states will have to vote on the so-called “final obligation,” which will last for five years.
China and EU officials have held several rounds of meetings to discuss the tariff issue, with Beijing criticizing the EU’s imposition of tariffs as “protectionist behavior” in June. Chinese Ministry of Commerce spokesperson Gao Feng stated on Thursday that he hopes both sides can “move towards each other, show sincerity, accelerate the negotiation process, and reach a solution acceptable to both parties as soon as possible, based on rules and reality.”
Chinese Electric Car Manufacturers Committed to Europe
Chinese electric car manufacturers have reaffirmed their commitment to the European market, where they have been expanding in recent years. Xpeng stated that it is “committed to providing high-quality innovative products to the growing European customer base and has a long-term commitment to these markets.” The company added that it is “actively evaluating the feasibility of establishing local manufacturing capabilities in Europe.” Xpeng currently manufactures all its cars in China. Having a European factory may help offset some of the tariffs. BYD, one of China’s and the world’s largest electric vehicle manufacturers, announced plans last year to open its first European factory in Hungary, but did not specify a timetable. Meanwhile, Nio stated on Thursday that it is “fully committed to the European market: we believe in promoting competition and consumer interests, and we hope to reach an agreement with the EU before the final measures are implemented in November 2024.”