The EU is reportedly close to finally reaching an agreement with Beijing over Made in China electric cars sold on the continent. But what risks does it pose for Europeans’ wallets?
The European Union and China finally seem ready to put aside their differences over electric cars imported from the Middle Kingdom.
Protectionist measures against Chinese electric cars
Earlier this year, the European Union conducted an investigation for many months into electric cars imported from Chinaand marketed in Europe. The problem ? The EU suspected Beijing of happily financing car manufacturers – Chinese or foreign – to encourage them to produce locally, in China. Brussels saw this as unfair competition for other brands present in Europethese electric cars being assembled at lower cost thanks to help from Beijing, and then sold in EU countries at unbeatable prices. EU inspectors had asked several manufacturers, including SAIC (MG, Maxus), Tesla, BYD and Geely to cooperate with them by providing them with evidence of these unfair subsidies. The verdict came after the summer: Tesla faced 7.8% additional customs fees (which are in addition to the 10% already in force), BYD by 17%, Geely by 18.8% and SAIC by 35.3%. The difference in surcharge between brands depended on the degree of cooperation of each with EU authorities. For all other manufacturers wishing to import a model produced in China into Europe, the normal rate that applies is 35.3%, or 45.3% in total. These measures angered China, which threatened to overtax certain European products, including pork, dairy products, spirits and cosmetics.
End of the trade war between the EU and China?
But after several weeks of open warfare and blackmail by intermediary mediathe situation could soon be resolved. German MEP Bernd Lange has in fact told several media outlets that China and the European Union are on the verge of finding an agreement, putting a place a floor price for “Made in China” electric cars and marketed on the continent. Concretely, each Chinese electric car sold in Europe cannot be displayed below a certain price. This would allow Western manufacturers to not have to cut into their margins to be at the level of Chinese brandsand would give them a certain advantage in terms of competitiveness. The amount in question has not been specified, and the EU has not yet officially confirmed this information. But, if this measure were to be made official, how would it translate for the Europeans’ wallets? Well as it stands it won’t change much. With the ceiling price, European manufacturers will logically stop continually lowering their prices as they have been doing in recent months to align themselves with their Chinese competitors. But to fear that they will decide, on the contrary, to revise them upwards once this “Chinese threat” is eliminated, seems highly improbable.
They could do it, but they have no interest in it. Demand for electric cars in Europe is already below expectationsmost models are still too expensive, so it is difficult to see how Western brands would shoot themselves in the foot by increasing their prices given this already difficult context. Especially since the race for accessible cars (less than €25,000) is well underway, and is currently occupying all the manufacturers’ design offices. Finally and when we see to what extent Toyota, Ford and even Nissan are having trouble selling their electrics because of overly ambitious prices, it would be difficult to see them increasing prices on models that are already unsaleable.
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