Author | Yu Yan
Editor | Zhou Zhiyu
After 8 months, the anti-subsidy investigation conducted by the European Union on imported electric vehicles from China has finally come to a conclusion.
On June 12, the European Commission announced that it will impose an additional tariff of up to 38.1% on Chinese imported electric cars. Considering the existing 10% tariff on Chinese electric cars by the EU, the actual tariff for some car manufacturers entering the European market in the future will reach 48.1%, which will have a certain impact on direct exports of Chinese electric vehicles to the EU.
This decision has sparked opposition. Hungarian Minister of National Economy, Nagy Marton, stated in a government declaration that Hungary does not agree with the EU's imposition of tariffs on Chinese electric cars.
European brands BMW and Volkswagen, which have long been deeply rooted in the Chinese market, also believe that this decision is incorrect. BMW Group Chairman Zipse stated that the European Commission's imposition of tariffs on Chinese electric cars is a wrong decision. Imposing tariffs will hinder the development of European car manufacturers and also harm Europe's own interests.
Mercedes-Benz Group stated that it always supports free trade based on World Trade Organization rules, including the principle that all market participants should enjoy equal treatment.
SAIC mentioned in a statement that its achievements are based on technological innovation rather than government subsidies, and earnestly hopes that the EU can carefully listen to the voices of Chinese and German car companies, resolutely avoid artificially setting up trade barriers for new energy vehicles, and effectively maintain a fair competitive market environment; Geely Holding released a statement, stating that in the past nearly 20 years, Geely Holding has made significant investments in Europe, enhancing the innovation capabilities of the entire industry chain, creating tens of thousands of job opportunities, and calling on the EU to carefully consider this decision.
Several interviewees also believe that there is still room for slight adjustments in the EU tariff rates, and the impact on leading complete vehicle manufacturers is controllable. In the future, Chinese automotive industry leaders will also accelerate the process of local assembly in the EU.
The capital market's reaction was also very direct. On the day following the announcement of the tariff results (June 13), SAIC Group closed with a 1.55% decline, BYD surged by 4.15%, and Geely Auto also rose by 1.69%.
According to the specific announcement, the EU imposed additional tariffs of 17.4%, 20%, and 38.1% on the three sampled companies - BYD, Geely, and SAIC, respectively. Other unsampled companies were subject to tariffs ranging from 21% to 38.1%. In addition, the EU stated that it will evaluate the evidence submitted by Tesla and may modify the 21% tariff imposed on it to a rate calculated separately by the EU.
However, these tariffs are temporary for now. By July 4, the European Commission will publish detailed calculations and immediately implement the tariffs after the announcement, meaning there is a three-week negotiation window. Furthermore, it will take another four months for these temporary tariffs to become permanent, as the European Commission needs to reach an agreement with member states during this period.
Patrick Hummel, Director of European Automotive Industry Research at UBS, also analyzed to Wall Street News that there may still be a turning point in theory, with a higher possibility of slight tariff adjustments. Hummel emphasized that if the tariffs are implemented, the benefits for some European mass market car manufacturers will be very limited
According to customs data, in 2023, China exported 482,000 pure electric passenger cars to the European Union, accounting for 45.1% of China's total electric vehicle exports. The three sampled enterprises mentioned above are the top three Chinese car brands in terms of sales volume in Europe in 2023, with SAIC exporting 242,900 units.
The impact of the tariff increase varies for each company. For leading enterprises, many European countries have expressed a welcoming attitude towards investment in building factories. Several car companies are planning to establish factories locally in Europe, and some companies are also setting up research and development centers in Europe. However, for small enterprises that do not have local factories, higher tariffs will weaken their competitiveness, putting them at a disadvantage in the market competition.
Hummel also pointed out that Chinese industry leaders may accelerate local assembly in the European Union. It has also received welcomes from EU member countries such as Hungary, Italy, and Spain.
In recent years, companies like BYD have started building factories in Europe, with Hungary being the most representative. In 2017, BYD's factory in the city of Komarom, Hungary, officially started production. In January of this year, BYD signed a pre-purchase agreement for land for a passenger car factory in the country.
SAIC had previously stated that when MG's sales exceed 100,000 units, they will build a factory in Europe. In their response this time, they also mentioned plans to introduce Chinese new energy technology and green factories into Europe.
Geely has deeper ties with Europe, holding many European brands such as Volvo, Polestar, smart, and Aston Martin, benefiting from previous acquisitions. Its subsidiary, Volvo, also has two factories in Sweden and Belgium.
In addition, brands like Changan, Great Wall, Chery, and NIO have also planned to build factories in Europe, with many companies having completed site selection work. Last month, Leapmotor and Stellantis' joint venture company, Leapmotor International, was officially established, focusing on exporting, selling, and manufacturing Leapmotor products in markets outside Greater China.
It can be said that from new energy vehicles to the entire automotive industry, the relationship between Chinese car brands and Europe is now closer than ever.
As Zipser said, protectionist measures like increasing import tariffs cannot help companies enhance their global competitiveness.
Of course, the EU's tariffs also indicate that Chinese car companies still have a long way to go in going global. Compared to European car companies, Chinese car companies are still newcomers in the international market and face ongoing risks and challenges. Europe is an attractive market, but it is indeed a very challenging one.
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