Explorer NO.1", a domestically manufactured vessel intended to export Chinese automobiles, at Yantai port, in eastern China's Shandong province. The European Commission is expected to announce next week whether to impose provisional extra tariffs on China’s electric vehicle imports and it’s hard to exaggerate its importance, and scope for unintended consequences.
If the Commission, the European Union’s executive, raises tariffs from the current 10% to try and curb Chinese EV sales, there’s a big danger of retaliation which would jeopardize German automakers likeHSBC Global Research said German manufacturers generate 20 to 23% of their global profits in China. Speculation about the size of new tariffs range from an increase to between 25 and 50%.
If the Commission manages to cramp Chinese EV sales it will undermine its own plan to outlaw the sale of new ICE vehicles by 2035. When the EU hatched this plan it disregarded the fact that this drastic switch to EVs – from a quota of about 22% of new car sales this year, to 80% by 2030 and 100% by 2035 – couldn’t be met by European production. The Chinese were years ahead with EVs and their battery technology, and according to UBS, held a 30% efficiency advantage over Europeans.
According to the European Automobile Manufacturers Association, the automotive industry provides direct and indirect jobs for 13 million Europeans, including 2.4 million manufacturing jobs. Currently, the majority of EVs built in China and exported to Europe are currently western, led by Tesla and including BMW. BYD has announced plans to localize EV making with a planned plant in Hungary. Other leading Chinese automakers are likely to follow suit. Last year Chinese brands sold just over 350,000 sedans and SUVs in Europe, mainly electric ones. SAIC’s MG led the way with 239,000 mainly EVs, about double 2022’s total. BYD sold about 16,000 and is mounting a big European sales effort.