Beijing reacted to the European Union’s decision to increase customs duties on electric cars from China. The country’s government hopes Europe will reverse course and calls for compromise.
Europe shows its muscles
The decision has been made: electric cars from China will now be subject to between 27% and 48% customs duties. Against only 10% today. The tax will be higher or lower for manufacturers able to prove that they receive less public support. For the moment BYD and Geely are playing the game. On the other hand, SAIC, the group which markets the MG brand in Europe, is refusing discussions.
The new European Union regulations will take effect from July 4. Beijing was quick to react. Through Xinhua, the official news outlet of the executive, the country’s government said it ” hopes that the European Union will reconsider tariffs on Chinese electric vehicles and stop moving in the wrong direction to protect its auto industry from competition “.
The reaction of China and other parties to the conflict, including European (and Chinese) car manufacturers, shows clear opposition to the European Union’s decision and a desire to de-escalate the situation. Manufacturers want to believe that it is still possible to conclude an agreement in order to avoid disproportionate taxes for car manufacturers.
Beijing wants to defuse the situation on electric cars
Beijing would like to initiate discussions to find a compromise. In its official statement, the government of the country specifies that “ given their economic structure and size, China and the European Union have every interest in teaming up on major economic and trade issues “. China says tariffs risk slowing adoption of electric cars.
Enough to jeopardize the global objectives which aim to fight against climate change. The investigation by the European Commission is due to end on November 2. This is when the European Union will decide on definitive customs duties. If Chinese manufacturers are obviously opposed to this measure, they expected worse, as in the United States.
The shares of some brands even climbed. According to Joe Mazur, analyst at research firm Trivium China, believes that “ this is by no means a death blow for the Chinese electric car industry in Europe “. Chinese firms charge higher export prices than on their national market. They therefore have room to maneuver, despite the increase in customs duties.
Automakers are worried
European car manufacturers, BMW, Volkswagen, Stellantis and Mercedes, have publicly made known their opposition to the text. German companies rely heavily on China and fear retaliation from Beijing. But there is also another scenario: several Western manufacturers manufacture their electric models in China. Cars intended for the European market.
Shares of BMW, Volkswagen and Mercedes fell on June 12 due to potential Chinese retaliation. Beijing is indeed considering reacting to the protectionist measures taken by the Union. The Chinese government could tackle ” sedans and SUVs equipped with engines with a displacement greater than 2.5 liters » and manufactured outside of China.
All engines combined, Volkswagen delivered 3,236,100 automobiles to China in 2023. It is today a market equivalent to Europe for the German brand. At BMW, sales in China represent 32% of the total volume (or around 825,000 units). For its part, Mercedes sold 737,200 models in the country over the past year.
Now that Europe has shown its muscles, it will be time to sit down around a table to discuss in order to find a compromise. If this is not the case, European car manufacturers could find themselves in a particularly delicate situation. There is a risk for historic brands to lose the leadership acquired over the last century across the world.
