The European Union has hiked import tariffs on Chinese electric cars from today (5 July), despite the threat of it waging a trade war with the Far East nation.
New additional duties on individual manufacturers range from 17.4 per cent to 37.6 per cent and are on top of the existing 10 per cent tariffs already in place on all EVs arriving from China.
The move is set to raise the price of cheap Chinese electric cars, especially popular MG models due to its parent company SAIC being subject to the highest duties of all, which now total almost 50 per cent.
And the decision could also cause a spike in the price of Teslas and electric Minis.
The EU has confirmed that ‘provisional’ hikes to import tariffs on Chinese EVs will come into effect today (Friday 5 July). Which manufacturers will be stung hardest and will the UK all increase duties?
The move comes following an eight-month EU investigation into the Chinese EV sector.
It found that companies making electric cars in China benefit from massive government subsidies that means they can undercut rivals in the EU on prices.
In turn, this has unfairly helped Chinese brands to achieve a larger market share of sales while threatening European auto firms and jobs on the continent, the probe concluded.
The EU is now the biggest export destination for Chinese EVs, representing 33 per cent of the total in 2023, the European Commission noted.
The move comes following an eight-month EU investigation into the Chinese EV sector which found that companies had been benefitting from massive government subsidies that allowed them to undercut rivals in the EU on prices
The European Commission says additional tariff amounts depend on the level of state subsidies received by the automotive companies in question. SAIC – which owns MG Motor – will be stung hardest with additional duties of 37.6% on top of the 10% tariff already in place
Officials announced the potential size of the higher duties on Chinese makers last month but on Thursday 4 July confirmed they will go into effect from Friday 5 July.
The duties are ‘provisional’, meaning they will be totalled up but won’t need to be paid until they’re confirmed by a vote of EU governments in November.
And the EU will only collect the duties if there’s a further finding that the European auto industry would have suffered material harm without them.
The four-month window will provide additional time for the EU and Chinese government to negotiate, with talks already having been held between Valdis Dombrovskis, the EU commissioner for the economy, and Chinese Trade Minister Wang Wentao.
The higher duties are not a goal in themselves but ‘a means to correct an imbalance,’ commission spokesman Eric Mamer said Thursday.
‘We certainly hope we can come to a solution which would allow us not to have to move forward on this path.’
The EU’s decision is another major blow to Beijing, which is already in a trade war with Washington after President Joe Biden in May announced 100 per cent duties on Chinese EV imports into the US.
Not all 27 EU member states have welcomed the move, though.
Germany has attempted to prevent the new tariffs from coming into force – or at least soften them – and Hungary and Sweden have also expressed reservations about the increased tariffs.
China is an important market for German car makers with almost a third of their sales coming from China in 2023.
Hungary, having recently hosted a visit by Chinese President Xi Jinping, is clearing land for a BYD factory to be built next year while Geely owns Volvo, the Swedish-based auto manufacturer.
There are fears that the EU’s decision could trigger a trade war with China. And not all 27 EU member states have backed the move to hike tariffs
Will the UK also hike tariffs on Chinese-made EVs?
The UK has so far not followed the EU in raising tariffs on Chinese EVs while the nation has been embroiled in a general election, with a change in power widely expected since the election was announced in May.
Outgoing Secretary of State for Transport Mark Harper had previously promised ‘robust measures’ to protect the British motor sector.
However, following Labour’s landslide victory at the polls overnight, the issue will now go straight to the top of the list for newly appointed transport and trade ministers to decide.
Automotive executives and industry commentators believe the UK will be forced to follow in the tyre tracks of the EU, especially with cheap Chinese cars proving popular in Britain.
MG, which is owned by SAIC, has sold 44,046 new cars in the UK in the first half of the year and is the 11th most popular brand, according to the latest car registrations update from the Society of Motor Manufacturers and Traders published yesterday,
Of the 10 least expensive electric cars sold in Britain, four are made in China.
The MG4, starting from £26,995, is the cheapest of all and represents good value for a family-size electric hatchback when compared to European rivals like the VW ID.3 (£35,700).
The new electric Mini Cooper, which is now made in China (we’ll come to this in the section below) starts from £30,000, while BYD’s £30,195 Dolphin and MG’s £30,495 ZS EV are also among the country’s most affordable battery-powered cars.
A hike in tariffs would ultimately push prices for these models higher as manufacturers pass on higher costs to consumers.
Ian Plummer, commercial director of Auto Trader, said he hopes the UK ‘isn’t tempted to take similar action’ on hiking import tariffs for Chinese EVs, describing the EU’s move as ‘disappointing’
Ian Plummer, commercial director of Auto Trader, said he hopes the UK ‘isn’t tempted to take similar action’, describing the EU’s move as ‘disappointing’.
He went on: ‘UK drivers already face a lack of affordable choices when it comes to electric cars, so it doesn’t make sense for us to limit those options even further for consumers.
‘We need to bring more buyers into the market by cutting down the ‘green premium’ which means EVs are usually 35 per cent more expensive than diesel or petrol cars. We’ll only do that with open competition to foster innovation, not by reducing choice for consumers.’
BYD, which is vying with Tesla to be the biggest global EV seller , is to be hit with a provisional additional tariff of 17.4%
The car brand set to be stung… including Mini
The rates, if applied, would be: 17.4 per cent on cars from BYD, 19.9 per cent on those from Geely and 37.6 per cent for EVs exported by China´s state-owned SAIC.
The latter owns MG Motor, which is growing in popularity in the UK thanks largely to its affordable EVs like the MG4.
Geely has brands including Volvo and EV-only Polestar, while BYD is starting to make a mark on the UK’s new car market with almost 3,000 registrations in the first six months of 2024.
MG, which is owned by SAIC, has sold 44,046 new cars in the UK in the first half of the year and is the 11th most popular brand in Britain
Other EV manufacturers in China including Western companies such as Volkswagen and Tesla would be subject to duties of at least 20.8 per cent.
However, the commission mentioned that Tesla might get an ‘individually calculated’ rate if duties are definitively imposed.
Electric Minis, which are being produced in China in partnership with Great Wall Motor, will also be stung with an import tariff of at least 20.8 per cent.
As well as Chinese brands, makers originating from other continents will also be stung. This includes Mini, which is producing its new electric Cooper (pictured) in China in collaboration with Great Wall Motor
Tesla could also be hit with the additional taxes due to its Gigafactory Shanghai manufacturing site that builds models sold in the EU. However, the commission mentioned that Tesla might get an ‘individually calculated’ rate if duties are definitively imposed
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