People look at the BYD Dolphin electric mini car during the 2023 Shenyang International Auto Show in Shenyang, Liaoning Province, China, May 3, 2023.
VCG | Visual China Group | Getty Images
Despite the EU's additional tariffs on Chinese-made cars, especially after last month's reduction in tariffs, Chinese electric vehicles will remain competitive in Europe.
In the latest tariff adjustments at the end of August, Chinese auto giant BYD's tariffs were reduced from 17.4% to 17%, and Geely Auto's tariffs were reduced from 19.9% to 19.3%. State Administration for Industry and Commerce dropped from 37.6% to 36.3%.
According to reports, in order to make the European market unattractive to Chinese electric vehicle exporters, tariffs must be as high as 50% To the Rhodium Research Group. The company said that number may need to be higher for vertically integrated manufacturers such as BYD.
Joseph McCabe, president and CEO of global automotive research firm AutoForecast Solutions, said the current tariffs will not pose a major deterrent to Chinese electric vehicle manufacturers. “Tariffs on Chinese-made electric vehicles will create obstacles but will not become a barrier to entry,” he added.
He pointed out that the EU tariffs are not as severe as those announced in North America because of the close ties between European and Chinese OEMs. In May this year, the United States announced a 100% tariff on Chinese electric vehicles. Canada followed suit last month.
“It's a delicate balance to promote domestic production in Europe without severely impacting business in China,” McCabe said.
Despite the European Union's efforts to restrict imports through tariffs, Chinese electric vehicle manufacturers are still launching newer, cheaper products.
At a conference in May this year, the Chinese giant BYD Dolphin model announced Sold to the European market for less than $21,550. This model is a rebrand of the China Seagull model.
In contrast, Western electric car maker Tesla The Model 3 is the brand’s cheapest offering, priced at UK $44,480. Tesla's electric vehicles produced in China also face a 9% tariff when imported into the EU.
Even with the 17% tax, BYD's Dolphin model will still be about $23,270 cheaper than the Tesla Model 3 imported from China.
To better compete with fierce Chinese rivals, German brand Volkswagen announces plans By 2027, develop a low-cost electric vehicle for the European market with a comparable price of approximately $21,476.
“Profitability has now given way to market share,” McCabe said. “The investment community rewards new, innovative electric vehicle manufacturers for what they promise they can do, rather than measuring the short-term financial performance of legacy manufacturers.” .
“If they really want to kill the electric vehicle industry in China, they have to impose 300% tariffs… You know, from my perspective, it doesn't make sense,” William Ma, chief information officer at GROW Investment Group, told CNBC on Tuesday's Asia road sign”.
McCabe warned that there was a high risk of China imposing retaliatory tariffs on Europe if its original equipment manufacturing industry was affected.
EU tariff talks began in June in response to “unfair subsidies” to Chinese electric car manufacturers, which posed a “threat of economic harm” to their European counterparts.
“This kind of geopolitics or sanctions will not disappear easily in the next year or two,” Ma said.