The European Commission announced that it will officially impose a temporary countervailing duty on pure electric vehicles imported from China from July 5. Among them, SAIC Motor imposed an additional tax rate of 37.6%, Geely 19.9%, and BYD 17.4%; The average additional tax rate for other automakers cooperating with the EU survey was 20.8%, while the additional tax rate for those that did not cooperate with the survey was 37.6%. Compared with the data disclosed in advance on June 12, the temporary additional tax rate determined this time has been reduced.
Screenshot of the official website of the European Commission
It is worth noting that the announcement also said that the EU will continue to maintain discussions with China. On the same day, He Yadong, spokesperson of China's Ministry of Commerce, said at a regular press conference that several rounds of consultations have been held between China and the EU at the technical level. "There is still a four-month window before the final ruling, and we hope that the EU will work with China in the same direction, show sincerity, step up the consultation process, and reach a mutually acceptable solution as soon as possible based on facts and rules." He Yadong said.
The EU's tariffs have turned around
Straight News noted that unlike the final "American-style tariffs", the introduction of "European-style tariffs" is only the beginning, and the "official announcement" on July 4 is not the end of the negotiations. According to EU law, the final tariffs will be determined after the EU countervailing investigation on November 2, that is, four months later, the European Commission will also convene member states to call a vote, and if 15 countries representing at least 65% of the EU's population vote against it, the "temporary" tariffs will not be formally implemented in November this year. Otherwise, the countervailing duty is valid for five years.
It is worth mentioning that the temporary tariffs do not mean that BEV manufacturers from China will need to pay the tariffs immediately. Until the EU finalizes tariffs in November, companies will only need to provide a bank guarantee to ensure that they are retroactively collected after the European Commission decides on the final tariffs. It also means that the EU may also abandon the retroactive temporary tariffs that arose between July 4 and November 4 after the final tariffs were finalized in early November. The final outcome will still depend on the final outcome of the negotiations between China and the EU.
In fact, it has taken nine months for the EU to impose tariffs on China from the initiation of investigations, sampling of enterprises, announcement of tax rates, and negotiations between the two sides. Compared with the United States, from the beginning of the Trump era to the latest imposition of electric vehicle tariffs on China, almost every increase leaves no room for improvement, and tends to quickly expand to almost all categories of goods, once imposed, it lasts for several years. The BBC analysis pointed out that this reflects that the European side is more rational and pragmatic in imposing tariffs on China.
In addition, there are serious differences within the EU over relations with China, especially in Germany and France, which dominate the EU after Brexit, and Germany, from officials to companies, has repeatedly opposed tariffs during the investigation. These differences give China and the EU room to come and go and bargain at the negotiating table.
Analysts believe that China's relatively calm reaction to the EU's imposition of temporary countervailing duties also shows that China and the EU are fully communicating on relevant issues, at least the relevant situation will not develop in the direction of "intensification". In the next four months, there will be considerable room for consultation and negotiation between China and the EU.
Behind the "tariff war" is the lack of confidence of the EU's major powers
Tariffs are a political tool, and behind politics are increasingly "demonized" Chinese cars, even made in China. When the "BYD Trailblazer 1", loaded with more than 5,000 electric vehicles, came to Europe, the Japanese media called the first domestically produced self-use ship a "white ship", a metaphor for the United States in the 19th century to open the door of Japan with a "black ship".
American critics have likened Chinese cars to the "Godzilla" of modern society, falsely claiming that "it has the ability to trample and destroy anything that stands in its way", and that "the only market that has not yet been attacked by Chinese companies is the United States". There is even an opinion that the EU's tariffs cannot stop the pace of the "strong attack" of Chinese automobiles.
Straight News noted that the automobile industry is a pillar industry of the European Union and has made a huge contribution to the finances and employment of major EU countries. According to the European Association of Automobile Manufacturers, the automotive industry contributes more than 390 billion euros to the EU's fiscal revenue, directly and indirectly creating 12.9 million jobs. According to a recent report released by the European Transport Environment Federation, about 19.5% of pure electric vehicles sold in the EU in 2023 were made in China, and this proportion is expected to climb to 25.4% in 2024. In 2023, the number and value of China's new car exports to the EU will both increase by more than 35%, while the number and value of EU new car exports to China will both decline.
It is observed that with the sudden emergence of electric vehicles in China, the traditional pattern of China-EU auto trade is reversing. From January to April this year, the number of Chinese-made electric vehicles registered in Europe, including the United Kingdom, increased by 23% year-on-year to a total of 119,300 units, accounting for about one-fifth of the region's imports, according to Schmidt's automotive research data.
Chinese electric vehicles at the 2023 Munich International Motor Show
The performance of Chinese electric vehicles in European countries is so bright, it is natural that some people are "red-eyed". France is the third largest car producer in Europe and the twelfth largest in the world, Spain is the second in Europe and the eighth in the world, and it is also a rising new energy manufacturing center in Europe.
Standing on the side of opponents represented by France and Spain, using tariffs to intercept China's new energy vehicles will create a more "level" competitive environment for local European car companies. Their books are "written": Assuming that 25 percent of imported Chinese cars are blocked with tariffs, it is expected to generate $3.3 billion in sales of locally produced electric vehicles and $1 billion in exports to domestic sales.
Analysts believe the EU's stance on China has become tougher as its green and tech companies lag behind global rivals. The core purpose of the tariffs is twofold, one is to curb the impact of Chinese electric vehicles on the EU's domestic auto industry, and the other is to encourage Chinese car companies to invest and build factories in Europe.
However, it is worth noting that the most direct impact of the tariffs will inevitably raise the price of Chinese electric vehicles in Europe, which will have a certain impact on export-dependent electric vehicle manufacturers; On the other hand, the EU's actions will also affect the overseas market planning of some Chinese electric vehicle manufacturers, and some car companies may withdraw or detour.
In addition to Europe, Chinese automakers are setting their sights on the global market
The European market has always been known for its huge consumption potential, mature market system and high technical standards, and is an important market for the global layout of Chinese enterprises. For China's electric vehicles, the European market is still an arena for competition with traditional auto companies, and it cannot be easily abandoned because of tariffs.
Cui Dongshu, secretary general of the passenger association, has analyzed that although the export of new energy vehicles to Europe has temporarily slowed down due to tariff issues, with the gradual adaptation of the impact of countervailing in Europe, China's new energy vehicle exports to Europe should still be able to rebound. Because Chinese automakers' market share in Europe increased by 0.3 percent in May, despite looming tariffs.
For Chinese enterprises, the response strategy is diversified, they can choose to enter the market in the form of joint ventures, invest in factories, or long-term layout, continue to increase innovation and expand brand influence. For example, Leapmotor chose to enter the European market in the form of a joint venture, taking into account the risk of tariffs.
On May 14, Leapmotor International, a joint venture between Leapmotor and Stellantis Group, was officially established.
At the same time, Chinese automakers can also set their sights on the broader global market, such as Thailand, Malaysia, Indonesia, Australia, South America, etc., which either have free trade agreements with China or are open to Chinese companies, and have greater development potential. At present, some auto parts and motorcycles in some ASEAN countries have implemented zero tariffs on Chinese goods, and are further opening up the market, and other products will also be gradually reduced to zero tariffs during a certain transition period.
On July 4, BYD, a leading Chinese new energy vehicle company, held a ceremony for the completion of its Thai plant and the roll-off ceremony of its 8 million new energy vehicles in Rayong, Thailand. At present, BYD's new energy vehicles have spread to more than 400 cities in 88 countries and regions around the world. In addition to Thailand, BYD also has passenger car production bases in Brazil, Hungary, Uzbekistan and other countries.
The Nihon Keizai Shimbun also noted that Chinese EV makers are exploring markets in Africa and the Middle East to open up sales channels. The emerging brand Nezha Automobile entered Kenya, while Xpeng Motors launched a new car in Egypt. It can be seen that focusing on Africa and the Middle East, which are promising markets in the future, Chinese car companies are stepping up their layout.
Author丨Zhu Haisheng, Shenzhen Satellite TV direct news reporter in Beijing