Le Soleil de Châteauguay | China supports electric vehicle manufacturers

Le Soleil de Châteauguay | China supports electric vehicle manufacturers
Le Soleil de Châteauguay | China supports electric vehicle manufacturers

The European Commission has published a detailed report revealing the subsidies and support China provides to its electric vehicle (EV) manufacturers. The report explains why the tariff imposed on SAIC is much higher than that of BYD.

A new tariff system in Europe

The EU’s new tariffs on Chinese EVs entering Europe came into effect on Friday, July 5. Until now, it was known that different manufacturers were facing varying levels of tariffs, but the European Commission’s report reveals for the first time the type of aid China is offering its car industry. And the aid is bigger than expected.

Massive state aid

State-owned bank loans, various financings, subsidies, sales incentives, discounted land for factories and heavily subsidized batteries are all listed in the Commission’s report detailing the assistance provided by the Chinese government.

Also read: China could deliver a third of the world’s vehicles by 2023

Why different prices?

The Commission analysed the aid received by each manufacturer to determine the level of tariffs applicable. SAIC, which owns MG, was found to have received more support than other companies, with the EU estimating that its subsidies accounted for 34.4% of its total support, Reuters reports. This figure includes 1.38% for loans from state banks, 8.27% for other financing, 8.56% in subsidies, 2.28% in incentives for EV sales, 0.67% for discounted real estate, and 13.24% for batteries that are much cheaper than their actual cost.

Reduced production costs

These subsidies come on top of China’s already lower production costs compared to Europe, where labor rates are higher. No wonder MG can afford to sell the electric MG4 for almost $13,000 less than VW does for an ID.3.

The EU’s response and the consequences for manufacturers

SAIC was also found to be less cooperative with the investigation, which partly explains why it was hit with the maximum tariff of 37.6%, on top of the 10% duty already in place. BYD and Geely, on the other hand, received less government aid and were more transparent with the Commission team, resulting in tariffs of 17.4% and 19.9% ​​respectively.

An uncertain future for tariffs

Despite talks with the EU in recent weeks, China’s auto industry has failed to persuade regulators to abandon their tariff plans. The new tariff system is only temporary for the first four months, however, and the two sides will continue to talk in the coming weeks. China has already warned Europe that it will retaliate with its own import tariffs if the situation cannot be resolved amicably.

With information from Carscoops

The text China supports electric vehicle manufacturers comes from The annual automobile – Automotive news

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