EU Considers Tariffs on Chinese EVs Amid Industry Concerns

The European Union’s deliberation on imposing higher import tariffs on electric vehicles (EVs) from Chinese automakers has ignited a robust debate within the automotive industry, with German car executives voicing cautionary remarks regarding the potential ramifications for both the bloc’s Green Deal initiative and the automotive sector at large.

At the heart of this discussion lies the European Commission’s decision to initiate an investigation in October, aiming to ascertain whether fully-electric cars manufactured in China benefit from distorting subsidies, thus warranting additional tariffs.

The prospect of such tariffs has elicited a spectrum of responses from industry leaders. BMW CEO Oliver Zipse, during a press briefing following the release of the German premium automaker’s quarterly results, expressed reservations about the proposed tariffs, highlighting potential adverse effects. BMW, alongside its German counterparts Volkswagen and Mercedes-Benz, is heavily reliant on revenues generated from its operations in China.

BMW’s reliance on the Chinese market is palpable, with the company importing Chinese-manufactured Mini EVs and the iX3 into Europe. In the first quarter alone, China constituted nearly 32 percent of BMW’s sales, underscoring its strategic significance.

Zipse cautioned against the introduction of import tariffs, citing the intricate global operations of the automotive industry as a key advantage. He warned that such tariffs could disrupt established supply chains and potentially trigger retaliatory measures, ultimately undermining the industry’s competitiveness on a global scale.

Volkswagen, another major player in the automotive sector, echoed similar concerns regarding potential duties. Thomas Schaefer, CEO of the Volkswagen brand, emphasized the inherent risks associated with such tariffs during the FT’s Future of the Car Summit, hinting at the possibility of retaliatory measures and broader repercussions for the industry.

The rise of Chinese automakers, including BYD and SAIC’s MG, in the European market presents an additional dimension to the debate. These companies have been aggressively targeting European consumers with competitively priced EVs, intensifying competition for Europe’s mass-market manufacturers.

The European Commission’s initiation of customs registration for Chinese EV imports in March further underscores the gravity of the situation, signaling the potential imposition of tariffs pending the outcome of the ongoing trade investigation.

The investigation, slated to conclude by November, could lead to the imposition of provisional duties as early as July. The EU aims to publish a summary of proposed provisional duties by June 5, with implementation scheduled for July 4.

European Commission President Ursula von der Leyen has stressed the imperative of preventing China from flooding the EU market with subsidized electric vehicles, underscoring the need for fair and balanced trade practices. This sentiment was echoed by French President Emmanuel Macron and Von der Leyen during recent discussions with Chinese President Xi Jinping.

BMW CEO Zipse underscored the intricate dependencies between automakers and China, particularly regarding components and raw materials essential for EV production. He warned that imposing tariffs could potentially undermine the EU’s efforts to meet stringent CO2 emission standards and impede progress towards achieving carbon neutrality.

Zipse emphasized the indispensability of Chinese resources for the EU’s ambitious Green Deal initiative, highlighting the interconnectedness of the automotive industry and the imperative of fostering global cooperation to address pressing sustainability challenges.