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The EU is ready to impose tariffs on cars imported from China? This boiling news, which has been circulating for several months, seems to have been confirmed, and in September 2023, EU President Ursula von der Leyen revealed that she would launch a "countervail" investigation into Chinese cars.
A month later, the survey began in earnest, and due to the relative silence of the Chinese government and companies after the start of the survey, it is assumed that preparations for the survey were already on the agenda.
In contrast to the reticence of Chinese companies, BMW Group, a well-known local automaker, reacted quickly to the investigation. And unexpectedly, he expressed his opposition and believed that such an approach would be detrimental to the European automotive industry.
What is the current situation of China's new energy vehicles in the European market, and what impact will this operation of the EU have on European car companies?
Déjà vu operation
The so-called "countervailing" can be understood as a trade protection practice in which the government imposes "countervailing duties" on the same type of imported products that are subject to preferential policies supported by the governments of exporting countries in order to maintain the price advantage of its own export commodities.
Once the "countervailing" is established in trade, it means that the price advantage of other countries' export commodities will be wiped out, and the profit margins created by the preferential measures of the original exporting countries will also flow from enterprises to importing countries.
From the nature of this measure, it can be seen that "countervailing" is not only a form of trade protection, but also a relatively soft means of trade sanctions. It is also one of the relatively widely used operations created and used in Europe and the United States and other countries.
Although it does not seem so cruel on the surface, due to the low threshold of direct reasons related to "initiating an investigation", and the "countervailing investigation provisions" in many countries are even more extensive, it is relatively easy to "suspect" or "convict".
When the reasons are established, the party that initiates the investigation will not hesitate to increase the import tax, and for countries and enterprises that urgently need to earn foreign exchange through exports, in most cases they can only endure silently, exchanging profit margins for the continuity of continued trade.
From the whole process, it can be seen that this trick is a tried and tested unilateral sanction method for countries with unequal trade scale. On more than one occasion, the mainland has been stuck in the neck by such means and has had to cede a large amount of interests.
Looking at the reasons used by the other side in trade between China and the EU, including quality inspection, environmental issues, food safety and other standards, the only purpose is to stifle the scale of China's commodity exports and the development of related enterprises.
Coincidentally, when the U.S. government restricted the export of Chinese electronic products to the United States on the grounds of "national security", it can be seen that the endless reasons for import restrictions are nothing more than an excuse for unreasonable sanctions.
Therefore, the investigation will most likely result in an increase in "countervailing duties", and since it is a formality, it is understandable that mainland enterprises do not express their opinions. Rather than arguing about the reasonableness of the investigation, it is better to start confronting the possible implications as early as possible.
However, as the world's oldest automobile export region, Europe's "attack" on China's new energy vehicles this time still makes many people suddenly - is China's automobile exports already so "dangerous"?
So what is the current situation of Chinese cars in the European market?
China's new energy vehicles "enter the EU"
When it comes to well-known European car brands, people usually think of mid-to-high-end car brands represented by "BBA", and also cite representatives of high-end cars such as Maserati and Lamborghini.
As the birthplace of traditional automobiles, it seems logical that European car companies lead the world trend. Japan, the United States and other countries, which are also among the top in automobile exports, are still unable to compare with Europe in terms of the number and influence of brands.
What Europeans didn't expect, however, was that it was their own invention and a standardization revolution that had begun to threaten their auto export status. And all this is related to the emergence of new energy and the rise of electric vehicles.
The first electric car in human history appeared in the United Kingdom, and due to problems with power and electric energy storage and transmission technology, it did not become the mainstream of the automobile market, but half a century later, the combustion engine car was invented and flourished.
When Europeans picked up this invention again, it coincided with the popularity of environmental protection in Europe at that time. As the "main culprit" of environmental protection problems in the mouth of environmental protection organizations, fuel vehicles can only reluctantly cede a part of the market to new energy vehicles.
However, the traditional automobile companies that have been brilliant for many years are not willing to give up the market they have occupied. They would rather adapt their products to the stricter emissions regulations they have over the years, rather than give up the market share they already have in favor of electric vehicles.
In fact, from the perspective of these car companies, the transition is undoubtedly painful and slow, after all, it is better to modify the internal combustion engine to reduce emissions, or to add a battery function system and fuel system in parallel to the car, than to overturn everything and start over.
However, it is precisely this stubborn behavior that makes European car companies lose the best opportunity to enter the new energy vehicle industry. It is unimaginable that the development of new energy vehicles in the development of new energy vehicles, which was originally the leader in the global automobile industry, is still immature.
On the other hand, in addition to Japan, which is focusing on hydrogen energy vehicles, the development of new energy vehicles in China and the United States is gaining momentum. Today, "Tesla" in the United States and "BYD" in China have become world-renowned brands.
If the development of electric vehicles in the United States can be predicted from the share of gasoline vehicles that was previously ahead of other countries, it is surprising that China, once the largest car import market, has become the world's leading exporter of automobiles.
According to the data released by the Continental Association of Automobile Manufacturers, in April this year alone, the mainland's automobile exports reached more than 420,000 units, an increase of nearly 10% month-on-month, and the amount of foreign exchange earned was more than 8 billion US dollars, a month-on-month increase of more than 10%.
Among them, the growth rate of the number of pure electric vehicle exports in the mainland is the most obvious, and the total export volume of cars, trucks and other models driven by pure electric vehicles accounts for more than ninety percent of the total.
After China's electric vehicle exports have made a name for themselves in the world, many car companies have put their export targets in Europe, the world's base camp for fuel vehicles, and rely on domestic stable raw materials, three-electric systems and vehicle industry chains continue to make efforts.
In terms of industrial chain, the mainland's "CATL" has been at the forefront of the world, compared with many European products are still in the stage of "oil to electricity", its competitiveness is not the same.
As of 2022, Chinese brands alone occupy three positions in the best-selling list of electric vehicles in Europe. According to this trend, more Chinese electric vehicles will go abroad and enter the European market in the future, which is basically certain.
Compared with traditional cars, there is no doubt that new energy vehicles have obvious advantages in cost and price, combined with the "countervailing investigation" proposed by the EU, it is also a tailor-made sanction strategy for prices, which shows that the EU has been afraid of China's electric vehicles.
So will the EU's approach play a role in protecting its own car companies, or will it be counterproductive?
"Countervailing" boomerang
"BMW" likened the EU's approach to a "boomerang", that is, the adverse consequences caused by this operation will sooner or later be fed back to the European car companies themselves. What is the reason for this definition that has not yet been revealed?
Germany's "Baden Daily" commented on this matter, saying: Although from the current facts, the development of electric vehicles in Europe is indeed lagging behind China, but rashly adopting sanctions is a far-term approach.
In addition to being a major exporter of electric vehicles, China is also the largest import market for German fuel vehicles. Once China adopts reciprocal trade sanctions, it will inevitably be Germany's traditional car companies that will suffer first.
If both sides reduce the volume of exports at the same time, China could lose only one of many overseas export markets, but Germany will undoubtedly suffer even more. It has to be said that as representatives of European countries, the analysis of the German media is relatively objective.
Many German companies said that from the perspective of normal competition in the automobile market, German cars are not afraid of the squeeze on market share brought by electric vehicles, after all, the market for fuel vehicles and electric vehicles is still relatively independent so far.
Compared with the difficulties that may be faced in the future, auto companies are more opposed to the rise of trade protectionism on a global scale, and such a practice of destroying the market mechanism not only does not play a protective role, but is not conducive to the overall development of the automotive industry.
You must know that the traditional automobile industry in Europe is now in a critical transition period, once the crisis caused by new technologies is cleared due to external forces, then the only way left for gas vehicles is to slowly decay.
Such fears are not unfounded, as evidenced by the US ban on China's 5G technology imports. Today, the prototype of 6G technology development has appeared in China, while the new generation of mobile communication technology in the United States is still far away.
epilogue
A dynamic market must be constantly innovating, retaining the need for product diversification on the basis of mainstream commodities accounting for the majority of the market. Any attempt to change or even prevent its normal development by external forces will eventually become a cancer that undermines the healthy development of the system.
Resources
1. "Investigating China's Electric Vehicles?"
2 "In Europe, the hinterland of the world's car manufacturing, Chinese automobiles have begun to "subvert the market"
3 "China's auto exports surge, the agency said it will challenge the dominance of European car companies"
4 Status and Development Trend of New Energy Vehicles in Europe
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