Chinese EVs face Europe's tariff wall amidst market gain
Soon, tariffs on Chinese electric cars are set to come into effect. Negotiations between Brussels and Berlin are ongoing, and the result could be Chinese brand factories in the EU. However, the automotive industry warns that this would effectively be a Trojan horse. Already, the automotive industry on the continent is barely managing.
It has been two weeks since the EU took action against Chinese electric car manufacturers when most member states gave the green light to impose punitive tariffs on imports of "electric vehicles" from China. These will take effect at the end of October and range from 7.8% to 35.3%, depending on the manufacturer. They will be added to the standard tariffs of 10%, meaning that in extreme cases, they will reach 45.3%.
Not everyone agreed on this issue; Germany voted against it. This should not be surprising, as Germany is an automotive powerhouse in the EU. China is the third-largest export market for European Union vehicles, after the USA and the United Kingdom.
Assault of Chinese "electric cars" on Europe
The ACEA calculates that just last year, over 438,000 electric cars (BEV), worth about 14 billion CAD, were exported from China to the EU. In the same period, only about 11,500 electric cars, worth approximately 1.2 billion CAD, went in the other direction.
In the European Union, Chinese-manufactured "electric cars" captured 21.7% of the market. This figure also includes Western-branded cars produced in China. When only Chinese manufacturers are considered, their share is 7.6%. It may seem modest, but the pace at which the Chinese are capturing the EU electric car market is impressive.
In 2020, Chinese brands captured only 2% of the electric car market in the EU. The following year, growth was slight, to 2.4%, but it was a pandemic year, during which global supply chains were disrupted across the automotive industry. In 2022, the Chinese rebounded to 4.6%. However, only in 2023 and 2024 did an impressive number of new brand debuts occur in EU countries. The European Commission forecasts that by 2025, Chinese brands will account for 15% of the electric car market.
Chinese cars "made in the EU"? Negotiations with Beijing continue
It's not surprising, then, that Ursula von der Leyen visited Berlin at the beginning of the week to discuss tariffs with Chancellor Olaf Scholz. The German automotive industry is in crisis. The President of the European Commission in the German capital announced that negotiations with China will continue, even if tariffs are implemented. Scholz, however, hopes to reach an agreement by the end of October.
Discussions include price commitments and investment issues in Europe, such as the production of Chinese brand cars locally. These initiatives, however, may turn out to be a modern Trojan horse. Carlos Tavares, CEO of the Stellantis Group, warned in an interview with Reuters that setting up factories for Chinese cars in Europe will only increase the region's production capacity surplus and could lead some local manufacturers to close factories.
The Chery group has already decided to take such a step, having purchased the former Nissan factory in Spain. Just before the tariff decision was made, Automotive News reported that Chery plans to delay the start of production by a year. Geely will also use part of the production capacity of the future Izera factory in Jaworzno for its own production needs.
Additionally, the Stellantis group—the same one whose CEO criticizes the opening of Chinese car factories in Europe—has partnered with the Chinese brand Leapmotor. It will produce and sell their electric cars in markets outside of China, including the EU. The production of the first demonstration models is reportedly taking place in Tychy, though the group has not confirmed this officially.
"Race to the bottom". What does the European Union accuse China of?
The European Commission conducted an investigation proving Beijing subsidizes Chinese electric car production, giving them a price advantage in the European market. "Europe is open to competition, but not to a race to the bottom," said von der Leyen in September 2023.
"I believe that we should be treated like European brands and operate on the same terms. Blocking the import of electric cars from China—as I understand potential punitive tariffs—will not suddenly improve the condition of European manufacturers. I believe in the power of partnership," stated Eric Zhang, vice president of Chery Automobile, the top exporter of Chinese cars, to money.pl.
