On October 4, the European Union will vote on whether to formally introduce tariffs on Chinese-made electric vehicles.
The motion passed despite Germany's vote against it. This means that the European Commission must convert the temporary tariffs into formal tariffs for five years within a few weeks.
Earlier, internal sources told Reuters that France, Italy, Poland and Greece would vote on October 4 to support additional tariffs on Chinese-made electric vehicles.
The European Commission launched a countervailing investigation into Chinese electric vehicles late last year and introduced temporary tariffs in July this year.
Under the revised scheme, in addition to the regular import duty of 10%, manufacturers producing in China will face additional tariffs ranging from 7.8% to 35.3%: for BYD, the surcharge should be 17%, of which Geely will be 19.3%, and the state-owned SAIC and unwilling companies will be 35.3%. 21.3% were assigned to other manufacturers. Tesla's punitive tariffs are 7.8%, which is relatively cheap.
According to the European Environmental Umbrella's Transport & Environment (T&E) calculations, punitive tariffs could make China's mid-size cars and SUVs more expensive than their European counterparts, while compact SUVs and luxury sedans are likely to remain somewhat cheaper.
However, according to a study by the association, European manufacturers may regain a decisive share of the EV market, especially since many affordable EVs are on the horizon.
The Kiel Institute for the World Economy (IfW) expects that Chinese EV sales in the EU could fall by around 40%.
According to the latest survey by Germany's ADAC, two-thirds of Germans want to buy cars from Chinese suppliers, especially young people.
74% of 30- to 39-year-olds and 72% of 18- to 29-year-olds can imagine buying a car from a Chinese manufacturer. However, for those over the age of 70, this is only 31%.
83% of respondents cited affordable prices as the main reasons for buying a Chinese car brand, followed by innovative technology (55%) and attractive design (37%).
In the October 4 vote, the temporary tariffs will be converted into full-fledged tariffs for five years at the end of the month, unless 15 member states oppose the tariffs and represent 65 percent of the EU's population.
The population of France, Italy, Poland and Greece has reached 39% of the total population of the European Union, which means that even if all the remaining 23 member states vote against tariffs, they represent only 61% of the population, which is still below the threshold of 65%.
European Commission President Ursula von der Leyen, who has been the main driver of the tariffs, stressed that the EU must protect itself from the onslaught of cheap Chinese-made electric vehicles, which are believed to be receiving huge government subsidies.
According to the European Commission, the proportion of Chinese-made electric vehicles registered in the EU market has soared from 3.5% in 2020 to 27.2% in the second quarter of this year, with the proportion of Chinese-brand cars rising from 1.9% to 14.1%.
Brussels also released a set of data saying that the current idle capacity of electric vehicles that China urgently needs to absorb through export trade is as high as 3 million per year, which is equivalent to twice the size of the EU market.
According to data released by the United Nations, China exported a total of 1.5 million electric vehicles in 2023, of which nearly 500,000 went to the European market. With the official tariffs imposed by the European Union, Chinese-made electric vehicles have to face shrinking profit margins or be forced to increase their prices in Europe.
At present, the electric vehicle market in Europe is sluggish, and the demand for electric vehicles in China's domestic market is also cooling. In response to this situation, some Chinese manufacturers are already planning to invest in Europe to set up factories for production.
According to information obtained by Reuters, the ongoing negotiations between the EU and China also include this plan, that is, Chinese manufacturers promise to invest and set factories in the EU, and set import quotas during the transition period.
The European auto industry, represented by Germany manufacturers, also opposes the EU's tariffs. These companies have a large number of operations in China, especially Germany car companies, whose sales in China account for about one-third of their total global sales.
Not long ago, Beijing has offered a series of countermeasures, but for the time being, instead of targeting European automakers, it has launched countervailing investigations against alcohol, dairy products, and pork.
As recently as October 2, Germany Chancellor Scholz said that Europe must continue to negotiate with China, and Germany would oppose it in a vote on the 4th.
Germany's Finance Minister Lindner also said: "The trade war with China will do more harm than good to Europe and Germany's key industries." ”
On the same day, the Germany Volkswagen Group publicly called on Berlin to vote against EU tariffs, arguing that punitive tariffs are not conducive to competition.
Trade unions in Germany's metallurgical industry and the automotive industry also issued a joint statement on October 3 asking Berlin to vote against it, stressing that "everyone is a loser in the escalating trade conflict."
Spain, which had supported tariffs, changed its stance after Prime Minister Pedro Sanchez's visit to China last month, saying the EU should reconsider its position, and received public support from the Germany government.
France President Emmanuel Macron said on October 2 that the Chinese government's subsidies for domestic companies were "unbearable" and that "in general, we must protect the level playing field in all of our industrial sectors." ”
A few days ago, the European Commission revealed that it would continue to negotiate with China even after the final import tariff vote was over, and was willing to reconsider the price commitment scheme, that is, the Chinese manufacturers themselves promised the minimum import price and the maximum import quantity.
Not long ago, the proposal of the Chinese manufacturer was rejected by Brussels.
Reuters also learned from other people familiar with the matter that another plan is to calculate a minimum import price for Chinese manufacturers based on the range, battery performance, body length, two-wheel drive or four-wheel drive of electric vehicles.