- EU imposes tariffs on Chinese EVs
- Tariffs could lead to price hikes
- Concerns over UK’s electric vehicle growth
The European Union (EU) has approved imposing tariffs on electric vehicle (EV) imports from China after the majority of member states backed the measure. The tariffs aim to shield the European automotive industry from what EU officials view as unfair competition due to Chinese state subsidies on its EVs.
Tariffs of up to 45% will be applied to Chinese-made electric cars over the next five years. However, concerns have arisen that this move may lead to increased prices for EV buyers in Europe.
The decision has created a rift between EU nations, with countries like France and Germany taking opposing stances. This action risks escalating trade tensions between the EU and China, which has condemned the tariffs as protectionist.
Impact on China’s Economy
China has been relying on high-tech sectors, including EVs, to rejuvenate its economy. The EU is a key market for China’s electric car exports. China’s domestic car industry has expanded rapidly over the last 20 years, with companies like BYD entering international markets. This has raised concerns in Europe that local automakers may struggle to compete with China’s lower-cost EVs.
Earlier this year, the EU imposed varying levels of tariffs on different Chinese EV manufacturers. However, Friday’s vote determined whether these tariffs would remain for the next five years. The charges were calculated based on estimated subsidies received by Chinese manufacturers, following an EU investigation. The European Commission has set specific tariffs for three major Chinese EV brands: SAIC, BYD, and Geely.
EU Divided Over Tariffs
EU members are divided on the issue of tariffs. Germany, whose economy is closely tied to car exports to China, opposed the tariffs, with many members abstaining from the vote. German automakers, including Volkswagen, have openly criticized the move, calling tariffs “the wrong approach.”
On the other hand, countries like France, Greece, Italy, and Poland supported the import taxes. A qualified majority of 15 member states would have been needed to block the proposal, but this was not achieved.
SAIC, the Chinese owner of the MG brand, announced it would maintain current EV prices for the remainder of the year, regardless of the vote outcome. Meanwhile, Germany’s leading industry group, BDI, urged the EU and China to engage in trade talks to avoid an escalating trade dispute.
The European Commission emphasized that it would continue to work with China to find alternative solutions to the import taxes, addressing what it described as “injurious subsidization” of Chinese electric cars.
Concerns in the UK Market
In August, the EU saw a 43.9% decline in battery-electric vehicle registrations compared to the previous year. Meanwhile, demand for electric vehicles in the UK surged to a record high in September, driven primarily by commercial deals and manufacturer discounts, according to industry figures.
Mike Hawes, CEO of the Society of Motor Manufacturers and Traders (SMMT), expressed concerns, stating that the market growth isn’t fast enough to meet mandated targets. The industry has called for greater incentives to encourage consumers to switch to electric vehicles, particularly as the ban on new petrol and diesel car sales approaches.
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The UK government recently delayed this ban to 2035, though the opposition Labour party has pledged to revert the deadline to 2030. The Zero Emission Vehicle (ZEV) mandate requires 22% of vehicles sold this year to be zero-emission, with that number set to rise to 80% by 2030 and 100% by 2035. Automakers who fail to meet these quotas could face fines of £15,000 per car.
Industry leaders, including executives from BMW, Ford, and Nissan, have warned the government that economic challenges, such as rising energy costs, material prices, and interest rates, have kept electric cars expensive. The average price for an electric vehicle in the UK stands at approximately £48,000.
A lack of confidence in the UK’s charging infrastructure is also deterring potential buyers from making the switch to electric vehicles, further complicating efforts to meet the ambitious ZEV targets.
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