How will EU Tariffs Impact Chinese EV Sector?

Team Veye | 14-Jun-2024

The European Commission’s decision to impose significant tariffs on imports of Chinese battery-powered EVs of up to 38% does not seem to have taken China by surprise. The Chinese Electric Cars, which are increasingly becoming global leaders, had been bracing this for quite some time. 

The provisional duties, much more than expected, were levied as a consequence of investigation into state aid to Chinese EV Makers since it was thought that Beijing was lending unfair support to Chinese Electric car brands that undercut European carmakers.

The EU Tariffs will not be uniform and will vary from company to company between 17.4% and 38.1%. For Chinese Electric Vehicle BYD, which competes with Tesla as the world’s top producer of battery electric vehicles, with the lowest additional levy of 17.4, it could still be viable to grow in Europe.

Earlier, the United States had steeply raised tariffs  on EVs from China, from 25% to 100%, with an aim to boost American jobs and manufacturing. With that, only European Union remained that had money and was large enough to absorb a substantial amount of China’s EVs.

Since Europe continues to be one of the most promising markets, Electric Vehicle producers are already thinking of either building factories in Europe or set up joint ventures with existing companies there. BYD is already in the process of building a factory in Europe, and could still profitably export to the EU. 

The Chinese government is having big plans for its EV industry, as part of a broader strategy to outpace America in the global tech supremacy. 

China, facing an economic slowdown, is promoting a low carbon economy with EVs, photovoltaics and lithium-ion batteries driving the growth.

Though China has no reason to be happy, it seems unlikely that it would rush into a full-blown trade war with its second biggest trading partner since it is already facing economic pressures at home.

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