Electric vehicles were once pinned on high hopes and were seen as the star of hope for the revitalization of China's auto industry. However, just as China is stepping up its efforts to support the electric vehicle industry, a blow has come from Europe, and the European Union has imposed countervailing tariffs of up to 48.1% on electric vehicles from China, dealing a heavy blow to Chinese electric vehicle companies.
The start was a setback
In 2021, China's electric vehicles will shine brightly in the global export market. According to the data, China's total electric vehicle exports reached 497,000 units that year, a year-on-year increase of 120%, accounting for 59.5% of the world's export share, becoming the world's largest electric vehicle exporter in one fell swoop.
Among them, Europe has naturally become a key destination for China's electric vehicle exports. In 2021, China exported 183,000 electric vehicles to Europe, accounting for 36.8% of China's total electric vehicle exports. By comparison, the figure for the same period in 2020 was only 54,000 units. The sharp rise in export volumes has undoubtedly caused the EU to be on high alert.
For Xpeng Motors, a new force in car manufacturing, 2021 is the first year to go overseas. Xpeng exported nearly 7,000 electric vehicles to Norway, Sweden and other countries that year, accounting for more than 70% of overseas exports. In the first half of 2022, Xpeng Motors sold more than 12,000 units in the Norwegian market, ranking among the top three in Norway in terms of new energy vehicle sales.
Trade wars loom over
To the surprise of Chinese EV companies, in December 2021, the European Commission responded by officially initiating anti-dumping and countervailing duty investigations against electric vehicles and their key components and assemblies imported from China.
After more than a year of investigation, on June 9, 2023, the European Commission finally made its final ruling:
- Countervailing duties of up to 48.1% for four years on electric vehicles imported from China;
- Among them, 62.7% tariffs were imposed on Anhui, BAIC, BYD, Great Wall Motor and their affiliates;
- 12% tariffs on new car companies such as Huawei and Xpeng;
- Core components and assemblies such as batteries and motors are also included in the scope of taxation.
Undoubtedly, this is a heavy blow to China's electric vehicle industry, which immediately aroused widespread attention and heated discussions in the industry.
The bearish strike can hardly hide the bright prospects
Regarding the EU's move, Zhang Yongnian, a researcher at the Institute of International Economic and Technological Environment of the Ministry of Industry and Information Technology of China, said that this will greatly affect the pace of China's electric vehicle exports to Europe, and the export of high-end electric vehicles will be hit hard.
Song Hongwei, an analyst in the automotive industry, also said frankly that the new regulations will have a greater impact on some new car companies that focus on overseas markets. Xpeng Motors, for example, currently accounts for 60% of its overseas sales in the European market. After the implementation of the new regulations, Xpeng will have to pay tariffs of about 30,000 yuan for every car exported to the EU market.
However, experts are not overly pessimistic about the prospects for the industry. Song Hongwei pointed out: "At present, the internal circulation of China's electric vehicle industry has been very good, and the domestic market has broad prospects. Even if exports are affected, the domestic market is sufficient to support the sustainable development of the electric vehicle industry. "
There are also voices in the industry that through this anti-subsidy tariff war, Chinese electric vehicle companies will be forced to accelerate the pace of independent innovation, get rid of the dependence on subsidies, and truly make breakthroughs in core technologies, so as to improve the added value of products.
Multi-faceted efforts to resolve the dilemma
In the face of the challenge of EU tariffs, the Chinese government and auto companies have taken precautions and actively responded:
At the government level, in addition to maintaining communication with the European side on the issue of subsidies, it has also vigorously promoted the independent innovation of new energy vehicle companies. The Ministry of Industry and Information Technology issued the "Industrial Plan (2021-2035)", proposing to achieve a major breakthrough in the core technology of new energy vehicles by 2025 and form a strong independent and controllable ability.
At the enterprise level, major car companies are adopting different strategies. BYD is accelerating its localization in Europe and will build its first overseas electric vehicle plant in Turkey at the end of 2022. New car companies such as Xpeng and Li have turned their attention to emerging markets, and Xpeng launched localized operations in Singapore, Sweden, the Netherlands and other countries last year.
In general, despite the challenges of the European Union, China's electric vehicle industry is still thriving. By accelerating innovation, localizing production, and exploring emerging markets, Chinese automakers will surely break through the resistance and continue to write a legend in the world.
