Senior executives from BMW and Volkswagen indicated that the European Union’s imposition of import duties on Chinese electric vehicles (EVs) could disrupt the bloc’s Green Deal plan and harm car manufacturers importing units made in the giant Asian country.
It is worth noting that in October, the European Commission launched an investigation to determine if EVs manufactured in China received distorting subsidies and warranted additional tariffs.
“You could shoot yourself in the foot pretty quickly,” said Oliver Zipse, CEO of BMW, to reporters after the German premium carmaker reported its quarterly results.
BMW imports Mini EVs manufactured in China and the iX3 to Europe.
Like their German rivals Volkswagen and Mercedes-Benz, BMW relies heavily on revenues from its Chinese business.
The Asian giant is BMW’s second-largest market after Europe and accounts for almost 32 per cent of sales in the first quarter.
“We don’t believe our industry needs protection,” Zipse told analysts on Wednesday, adding that operating globally gives major car manufacturers an industrial advantage.
“It’s easy to jeopardise that advantage by introducing tariffs on imports,” he added.
Volkswagen, Europe’s largest carmaker, which also heavily depends on China, warned that potential tariffs overall carried some risk.
“There’s always some sort of retaliation,” said Thomas Schaefer, CEO of the Volkswagen brand, at the FT’s Future of the Car Summit.
In March, the Commission initiated customs registration for imports of Chinese electric vehicles, meaning they could be subject to tariffs from that moment onwards if the trade investigation concludes they are receiving unfair subsidies.
The investigation should conclude in November, but the EU could impose provisional tariffs in July.
Brussels should publish a summary of proposed provisional duties by June 5, and these duties would be imposed by July 4.
European Commission President Ursula von der Leyen said on Wednesday that Europe needed to take action to prevent China from flooding the bloc’s market with subsidised electric vehicles.
French President Emmanuel Macron and Von der Leyen urged Chinese President Xi Jinping on Monday to ensure a more balanced trade with Europe.
Zipse told analysts that BMW and other carmakers have “bilateral dependencies not only on the final product, but also on the component and raw material side.”
Imposing tariffs could backfire as new EU rules on CO2 emissions will come into effect next year, requiring more electric vehicles, which rely on Chinese battery materials.
“There won’t be any car in the EU without components from China,” Zipse asserted.
He said that imposing tariffs would undo the EU’s industrial plan to ensure the bloc leads in reducing carbon emissions and developing the necessary technology to do so.
“There’s no Green Deal in Europe without resources from China,” Zipse stated.
