Electric Vehicle | 10 EU Member States Support Additional Tariffs on Chinese Electric Vehicles

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Electric Vehicle | 10 EU Member States Support Additional Tariffs on Chinese Electric Vehicles

Date：2024-10-05

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Keyword tags： EV Policy EU

On Friday, October 4th, the 27 EU member states conducted a round of voting on whether to impose higher tariffs on electric vehicles manufactured in China. According to media reports, 10 countries voted in favor of the tariff rates established on September 10, with France, Italy, and Poland among those in favor. Additionally, 12 countries abstained, and 5 countries voted against. The details are as follows:

• 10 Countries in Favor: Bulgaria, Denmark, Estonia, France, Ireland, Italy, Lithuania, Latvia, the Netherlands, and Poland. (Accounting for 45.99% of the EU population)

• 12 Countries Abstained: Belgium, the Czech Republic, Greece, Spain, Croatia, Cyprus, Luxembourg, Austria, Portugal, Romania, Sweden, and Finland. (31.36%)

• 5 Countries Against: Germany, Hungary, Malta, Slovenia, and Slovakia. (22.65%)

Since the proposal requires the votes of 15 EU member states (representing 65% of the EU population) to be blocked, this means the planned tariff proposal will ultimately be passed.

Germany and Hungary are staunch opponents of the tariffs. Major German car manufacturers are against the aforementioned tariffs. BMW CEO Oliver Zipse described the vote as a "fatal signal for the European automotive industry." He stated that the EU and China need a quick settlement to prevent trade conflicts. Volkswagen said that the tariff is the "wrong approach."

Furthermore, Stellantis also expressed its support for free and fair competition, noting that the industry is under pressure from ambitious carbon reduction plans and "the Chinese global commercial offensive."

Hungarian Prime Minister Viktor Orban said last Friday that the EU is heading towards an "economic cold war" with China.

Euronews indicated that the high abstention rate of 31.36% also reflects the long-term anxieties of European countries facing Sino-European trade. It stated that a senior EU official warned that if strong measures are not taken against Chinese electric vehicle imports, EU car manufacturers will suffer "unsustainable, possibly irrecoverable losses” and be pushed out of the lucrative market of net-zero mobility, resulting in a loss of 2.5 million direct and 10.3 million indirect jobs across the EU bloc. Moreover, with high energy prices, low consumer demand, and fierce global competition, the EU automotive industry is already in turmoil. The EU's additional tariffs aim to offset the destructive impact of Chinese electric vehicle subsidies on the EU electric vehicle industry and to narrow the product price gap between Chinese and EU companies.

The Diplomat and Nikkei Asian reported that the EU Commission stated that China has an annual idle capacity of 3 million electric vehicles that need to be exported, twice the size of the EU market. Given that the US and Canada have imposed a 100% tariff on Chinese electric vehicles, these electric vehicles will clearly be mainly sold to Europe.

The EU launched an anti-subsidy investigation into Chinese electric vehicles in October 2023 and proposed a tariff rate for Chinese electric vehicle imports on July 4, 2024. On August 20, the EU proposed its final tariff proposal based on the tariffs of July 4, and then, on September 10, the EU slightly reduced the aforementioned tariff levels. The specific tariff rates passed in this vote are as follows:

• Tesla: 7.8%

• BYD: 17%

• Geely: 18.8%

• SAIC: 35.3%

• Other Chinese electric vehicle manufacturers cooperating with the investigation but not individually sampled: 20.7%

• Other uncooperative Chinese electric vehicle manufacturers: 35.3%

The above tariffs will be based on the current 10% tariff. This means that the comprehensive tariff rate for European imports of electric vehicles from different Chinese electric vehicle manufacturers will reach 17.8% to 45.3%. The above tariffs are likely to take effect on October 31, with a validity period of at least five years.

Earlier this year, the US and Canada both imposed a 100% additional import tariff on Chinese electric vehicles, and the Biden administration in the US also proposed a complete ban on Chinese connected car hardware and software due to security issues.

In response to the EU's latest actions, China's Ministry of Commerce stated that China strongly opposes the unfair, non-compliant, and unreasonable protectionist practices of the EU in this case, and strongly opposes the EU's imposition of anti-subsidy duties on Chinese electric vehicles. The EU's protectionist practices seriously violate WTO rules, disrupt normal international trade order, and not only hinder China-EU trade and investment cooperation but also delay the EU's own green transformation process and affect the global effort to address climate change.

Previously, media reports suggested that China might start imposing additional tariffs on the EU's dairy, brandy, and pork industries.

Although the EU reached a resolution through the vote last Friday, negotiations between the EU and China will continue. And the EU allows Chinese companies to submit minimum price commitment offers after the internal investigation deadline expires on October 30. If these offers are accepted (but not guaranteed), EU customs will stop imposing new tariffs on the brands benefiting from the measure. In addition, affected car manufacturers will be allowed to request custom tariff rates like Tesla.

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