Mobility Portal, Spain
Date: June 17, 2024
European tariff proposal on Chinese electric cars: Industry split on potential impact
By Lucía Colaluce
European Union

European tariff proposal on Chinese electric cars: Industry split on potential impact

The European Commission's preventive measure to impose tariffs on Asian electric vehicles has sparked diverse reactions across the sector, with some experts warning of potential retaliatory actions from China and questioning the long-term effectiveness of such measures. What did each one express?
European tariff proposal on Chinese electric cars: Industry split on potential impact

On June 12, the European Commission provisionally determined that China‘s battery electric vehicle (BEV) supply chain is benefiting from unfair subsidies, posing a threat of economic harm to BEV manufacturers in the European Union (EU).

Within this framework, the Commission has already disclosed the levels of provisional countervailing duties it would apply to imports of zero-emission cars from China, including those from BYD, Geely, and SAIC.

However, this measure has elicited various reactions from industry experts, who have not hesitated to voice their opinions.

In fact, in a conversation with Mobility Portal Europe, Manuel Reis, Vice-President of the Electric Vehicle Users Association (UVE) of Portugal, expressed his concerns.

“Due to the limited options available to consumers and the ongoing transition, I believe imposing these tariffs—intended to ‘protect’ European brands—is not beneficial,” commented Reis.

European manufacturers have been advised since 2019 to concentrate on electric vehicles (EVs), yet some have failed to do so adequately. As a result, we now face a lack of competition with China, which I think is detrimental to the industry,” he concluded.

Oliver Zipse, CEO of BMW.

Likewise, Oliver Zipse, CEO of BMW, echoed this sentiment, arguing: “This decision for additional import duties is the wrong way to go. The Commission is thus harming European companies and their interests since protectionism risks starting a spiral: tariffs lead to new tariffs, to isolation rather than cooperation.”

He added: “From the BMW Group’s point of view, protectionist measures, such as the introduction of import duties, do not contribute to successfully competing in international markets. Free trade remains the BMW Group’s guiding principle. Our company is committed to this.”

Martin Salamon, Sales Manager of ejoin.

Together with Zipse and Reis, Martin Salamon, Sales Manager of ejoin EU, supports the stance: “These additional tariffs are detrimental to consumers. Many people are waiting for affordable electric cars, and currently, traditional car manufacturers are struggling to provide cost-effective EVs with solid performance.

As a consequence, he conveys that Chinese manufacturers will likely build factories in the EU, like BYD in Hungary.

“Electric mobility was primarily developed for sustainability. While production has a higher carbon footprint, EVs are better for the environment during operation. This carbon footprint will decrease further with new renewable energy sources,” voices Salamon.

He closes his statement: “In the end, the availability of affordable EVs and the reduction of the carbon footprint in transport will both be delayed.”

Krzysztof Burda, president of PIRE.

Meanwhile, Krzysztof Burda, President of the Polish Chamber of Electromobility Development (PIRE), stated that the new temporary tariffs on some Chinese electric vehicle manufacturers are “a double-edged sword.”

“From Brussels’ point of view, new tariffs are a kind of penalty due to unfair subsidizing by the Chinese government. I can understand the European Commission’s decision to protect the market against unfair practices,” he expresses.

“However, the Chinese government announced retaliatory actions that may also affect local vehicle manufacturers who produce in the Asian giant for the EU industry or export vehicles to China,” the executive continues.

Burda concludes: “It is difficult to assess whether this is a good move. European producers will certainly gain time, catch their breath, and perhaps catch up with the distance between them.”

Szymon Żuławiński, PR and Communications Specialist of FPPE.

In Poland, the opinions do not differ much.

Szymon Żuławiński, PR and Communications Specialist of the Electric Vehicles Promotion Foundation (FPPE) determines: “The EU Green Deal promised growth and job creation, but this goal is unattainable if we rely solely on imported EVs.”

Żuławiński elaborates: “While the tariffs are a positive step, Europe must implement a robust industrial policy to accelerate electrification and foster domestic manufacturing.”

“Simply introducing tariffs while abolishing the 2035 deadline for phasing out polluting cars would hinder progress and be counterproductive,” he finally indicates.

Julia Poliscanova, Senior Director for T&E.

Similarly, Julia Poliscanova, Senior Director for Vehicles and eMobility Supply Chains at Transport & Environment (T&E) said: “The EU Green Deal came with the promise of growth and jobs, and that’s not possible if our EVs are all imported.”

“The tariffs are welcome but Europe needs a strong industrial policy to speed up electrification and localise manufacturing. Just introducing tariffs while scrapping the 2035 deadline for polluting cars would slow down the transition and be self-defeating,” she subsequently explains.

In contrast, for Cecil Coulet, Head of European Public Affairs at Équilibre des Énergies (EdEn), the adoption of new tariffs on Chinese electric cars is “a good signal of the end of ‘naivety’ in EU trade.”

Cecil Coulet, Head of European Public Affairs at EdEn.

“It is an opportunity for the EU to redeploy its industry and become a global leader in clean technologies and in particular in clean mobility, but that cannot happen if the EV industry has to compete against heavily subsidized manufacturers from third countries,” states the EdEn representative.

“With these new tariffs, the Commission shows it is ready to take action on this issue that EU businesses have pointed out for a long time,” he adds.

Furthermore, he argues that, in comparison with the United States, the EU must be more cautious with this type of tariff, as they could backfire, since “Europe needs to rely on a cost-competitive domestic industry, which is still largely undeveloped.”

In conclusion, Coulet raises a question: “Beyond the symbol, how effective will these tariffs be? With Chinese EVs being sold in Europe at a much higher price in the continent, it is very possible that the margins of Asian manufacturers are enough to let them absorb the additional cost without passing it onto the consumer.”

By the end of the day, with the multitude of negative beliefs surrounding the temporary imposition of taxes on imported Asian EVs, it is only natural to wonder whether this is a wise move, or if it will ultimately harm the industry in the future.

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