On June 12, the European Commission announced that if no solution is reached with China, a temporary anti-subsidy tax scheme for electric cars imported from China will be implemented starting from July 4. The European Commission stated that for three sampled companies - BYD, Geely Auto, and SAIC Motor, anti-subsidy taxes of 17.4%, 20%, and 38.1% will be respectively imposed; electric car manufacturers who participated in the investigation but were not sampled will face an average anti-subsidy tax of 21%; and manufacturers who did not cooperate with the investigation will be subject to a 38.1% anti-subsidy tax.
Currently, the EU imposes a 10% tariff on all imported cars. With the additional anti-subsidy tax, this means that BYD's electric cars exported to Europe will face a total tariff of 27.4%; Geely Auto will face 30%; and SAIC Motor will face a high 48.1%.
In addition to the three mentioned companies, other companies that participated in the investigation but were not sampled include: Aiways, JAC, BMW, Chery, FAW, Changan, Dongfeng, Great Wall, Leapmotor, Nanjing Golden Dragon, Nio, Tesla, and XPeng. These companies will need to pay an additional average of 21% in anti-subsidy taxes, bringing the total tariff to 31%. As for other companies that did not cooperate with the investigation, they will face a total tariff of 48.1%.
Following the announcement by the European Commission, the European Union Chamber of Commerce in China immediately issued a statement expressing deep disappointment and strong dissatisfaction with the European Commission's disregard for advice and insistence on taking trade protectionist actions. The Chamber believes that this measure will not only seriously harm the legitimate rights and interests of Chinese and European car companies and the automotive supply chain companies, distort the fair competition environment for Chinese electric car companies in the European market, but also impact normal economic and trade exchanges in the automotive and related fields between China and Europe. The &#34;spillover effect&#34; will pose challenges to China-EU economic and trade relations and bilateral relations.
&#34;The survey conducted by the European Union Chamber of Commerce in China shows that for most Chinese car companies, tariffs imposed by the EU above 10% are already at a high level, which will directly negatively impact their exports to Europe. The current temporary tariff range of 17.4% to 38.1% implies severe market access barriers,&#34; emphasized the European Union Chamber of Commerce in China.
In fact, the high rates of anti-subsidy taxes imposed by the European Commission have exceeded expectations. Previously, the European professional institution Rhodium Group had predicted that the punitive tariffs imposed by the EU would not exceed 19%, as the average punitive tariffs globally for industries found to have subsidies are 19%, and the EU would not deviate significantly. However, it appears that the EU's actions are more significant. One reason may be the overinterpretation of the low cost of Chinese electric cars by the outside world.
During the European Commission's investigation, many foreign media and institutions have voiced out, stating that even if the EU imposes punitive tariffs at the high end of 30%, Chinese electric car manufacturers will still achieve higher profit margins on their cars exported to Europe, as they have significant cost advantages. Large car companies such as BYD, SAIC Motor, and Geely Group have excelled in this aspect
According to our calculations, under the condition of the EU imposing a 30% tariff, BYD's Seal U will still generate approximately 15% profit for the company, equivalent to 6,300 euros, which is more than 4.8 times the domestic profit. This means that exporting cars to Europe is still profitable for Chinese car companies, as stated in a consulting report by the Rhodium Institute.
Now, with tariffs as high as 48.1%, it will inevitably severely impact the export of Chinese electric vehicles. A recent analysis report released by the Kiel Institute for the World Economy in Germany pointed out that if the EU imposes a 20% import tariff on Chinese-made electric vehicles, the quantity of Chinese-made electric vehicles imported into the EU will decrease by one-fourth, about 125,000 vehicles, with related trade losses amounting to nearly $4 billion. It now appears that the related losses may be even greater.
The institute also mentioned that since cars produced locally in Europe are much more expensive than Chinese cars, once the EU imposes tariffs on Chinese-made electric vehicles, the prices of electric vehicles in the European region will be significantly affected, leading to a substantial increase in the cost for local consumers to purchase cars. The higher prices may hinder the transition to electric vehicles in the EU.
On the corporate side, German car manufacturers have consistently opposed the EU's imposition of tariffs on Chinese-made electric vehicles. Following the announcement, the Chairman of the BMW Group, Zipse, immediately issued a statement saying, &#34;The European Commission's decision to impose tariffs on Chinese electric vehicles is a wrong decision. Imposing tariffs will hinder the development of European car manufacturers and also harm Europe's own interests.&#34; Zipse also pointed out that for the BMW Group, protectionist measures such as increasing import tariffs do not help companies enhance global competitiveness.
It is currently uncertain whether China will take retaliatory measures. There were rumors in the industry earlier that China is considering raising temporary tariffs on large-displacement imported cars, not limited to the automotive sector, and may also impose corresponding tariffs on European products such as wine and dairy products.
Earlier on June 12, Chinese Foreign Ministry spokesperson Lin Jian responded to the news that the EU will impose tariffs on electric vehicles imported from China starting next month, stating that China has repeatedly clarified its position on the matter. This anti-subsidy investigation is a typical act of protectionism. The EU's imposition of tariffs on electric vehicles imported from China on this basis violates market economy principles and international trade rules, undermines China-EU economic and trade cooperation and the stability of the global automotive supply chain, and will ultimately harm Europe's own interests.
Following the announcement by the European Commission, a spokesperson for the Ministry of Commerce also stated that the European Commission disregarded the objective fact that China's advantage in electric vehicles comes from open competition, disregarded WTO rules, disregarded the comprehensive cooperation of relevant Chinese companies in the investigation, artificially constructed and exaggerated the so-called &#34;subsidy&#34; projects, abused the &#34;facts available&#34; rule, and imposed excessively high subsidy levels. This is blatant protectionism, creating and escalating trade frictions, using &#34;maintaining fair competition&#34; as an excuse to &#34;undermine fair competition,&#34; the greatest form of &#34;unfairness.&#34; China will closely monitor the EU's subsequent progress and will resolutely take all necessary measures to defend the legitimate rights and interests of Chinese companies

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The European Union will impose anti-subsidy duties on electric cars imported from China, with BYD, Geely, and SAIC Motor facing tax rates of 17.4%, 20%, and 38.1% respectively. Other companies involved in the investigation but not sampled will need to pay an additional 21% tax. This move has sparked dissatisfaction from the EU Chamber of Commerce in China, believing that it will harm the interests of Sino-European automotive companies and bilateral economic and trade relations

The European Union (EU) will impose temporary anti-subsidy tariffs on electric cars imported from China starting from July 4th if no resolution is reached with China. The EU Commission announced that BYD, Geely, and SAIC Motor will face additional anti-subsidy tariffs of 17.4%, 20%, and 38.1% respectively. Other electric car manufacturers that participated in the investigation but were not sampled will face an average additional tariff of 21%, while non-cooperative manufacturers will face a 38.1% tariff. This is in addition to the existing 10% import tariff on all imported cars in the EU. The EU-China Chamber of Commerce expressed disappointment and strong dissatisfaction with the EU Commission's decision, stating that it will harm the rights and interests of Chinese and European car companies and distort fair competition in the European market. The high tariff rates imposed by the EU Commission exceeded expectations, possibly due to the overestimation of the low cost of Chinese electric cars. Some media and institutions previously believed that even with a 30% tariff, Chinese electric car manufacturers would still enjoy high profit margins due to their cost advantages.

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BYD COMPANY 17.4%, GEELY AUTO 20%, SAIC Motor 38.1%, EU imposes additional tariffs, the boot drops