why this could backfire

We talked about it a lot on Supercharged : following the results of an investigation proving China's subsidies to its country's electric car brands, the European Commission has decided to increase customs fees for electric cars produced in China.

To go further
We know the amount invested by China to dominate the electric car

The rates, initially temporary, were officially ratified on October 29 for the next five years. China's response was not long in coming: according to Automotive News Chinashe has just filed a complaint with the World Trade Organization (WTO).

A little reminder of the facts

As a reminder, the new rates are added to the 10% already in place. They were calculated based on numerous factors (which required several corrections over time), including the degrees of “cooperation” during the investigation. Here is the detail:

• Tesla: 7.8% (European Model 3s come from the Shanghai factory; Model Ys are assembled in Berlin, and are therefore not affected);
• BYD : 17 % ;
• Geely (group of Volvo, Polestar, Smart, Lynk & Co, Zeekr or Lotus): 18.8%;
• SAIC (to which MG belongs): 35.3%;
• Other brands that have cooperated (including Xpeng or Nio): 20.7%;
• Brands that did not cooperate: 35.3%

A hell of an increase, therefore, which does not go unnoticed by Beijing. A spokesperson for the Ministry of Industry declared: “China believes that the EU's final decision on anti-subsidy measures lacks factual and legal basis, violates WTO rules and constitutes an abuse of trade remedy measures”. Hence the complaint.

What to expect?

First thing to know: if the eight negotiation sessions between China and the EU did not result in the defusing or cancellation of rate increases, other consultations are already planned between the two powers on the subject, recall The Tribune.

China, obviously, is not sitting idly by. Even if the movement seems to be on hold, numerous factory projects in Europe are underway: BYD, for example, is building a site in Hungary and has formalized the construction of a second site in Turkey. Other countries, such as Morocco, could also host factories thanks to their proximity to Europe.

On the other hand, Beijing is imagining a response. Following the same model as the EU, an investigation is underway into European pork, dairy products and cognac. Another concern: German brands are banking heavily on the Chinese market to sell their cars, and the country could make their lives even more complicated.

They could also focus on the export of their hybrid and plug-in hybrid cars, exempt from European sanctions. MG and BYD have thus started to offer their hybrid models in France, and this could only be the beginning.

Let's finish with our European factories, which could also be affected. Let's not forget that China has a virtual monopoly on the value chain of an electric car (notably batteries); why fear supply problems in the future? The question deserves to be asked.