Written by Zhang Linyu
Editor / Huang Dalu
Design / Division
来源 / Reuters，Wall Street Journal，Bloomberg
作者 / Ludwig Burger，Clarence Leong，Stefan Nicola
The European Commission voted on October 4 in Brussels, the capital of Belgium, to impose high tariffs on China's new energy vehicle imports, with the highest tax rate reaching 45.3%.
The voting process was adopted by 10 countries in favor, 5 countries against and 12 abstentions.
Ten countries, France, Ireland, Italy, Lithuania, Bulgaria, Denmark, Estonia, Latvia, Netherlands and Poland, accounted for 45.99 per cent of the EU's population.
The 12 abstaining countries were Sweden, Spain, Belgium, the Czech Republic, Greece, Croatia, Cyprus, Luxembourg, Austria, Portugal, Romania and Finland, representing 31.36 per cent of the total population of the European Union.
Voting against were Germany, Hungary, Malta, Slovenia and Slovakia, which account for 22.65 per cent of the EU's population.
On October 6, Volkswagen Group CEO Oliver Blume was interviewed by the local media "Sunday Bild" in Germany, during which he said: "It should not be punitive tariffs, and Chinese car companies investing in Europe should be given corresponding preferential treatment." Chinese companies that invest locally in Europe and create local jobs, while working with local companies, should receive corresponding tariff incentives. ”
Blume called on the EU to consider adjusting tariff rates. At the same time, he said that China's possible retaliatory tariffs may end up hurting the interests of European auto groups.
The BMW Group also issued a statement on October 6, saying that the voting results on October 4 are an important signal for the fate of the European automotive industry. What is needed now is a swift rapprochement between the European Commission and China to prevent a trade conflict in which no one benefits. The fact that Germany voted against the increase in tariffs is an important signal that increases the chances of a negotiated solution.
The EU's approach of imposing additional tariffs on Chinese EVs simply does not work. Rather than improving the competitiveness of European automakers, this could hurt those that are active on a global scale. Moreover, the tariffs will also limit the supply of electric vehicles to European consumers, thereby slowing the low-carbon development of the European transportation sector. In addition, it seriously undermines the principle of free trade that the EU has always advocated.
Mercedes-Benz also issued a statement on the same day, firmly believing that countervailing tariffs can weaken the competitiveness of an industry in the long run; The proposed imposition of countervailing duties by the European Commission is considered to be a mistake that could lead to far-reaching negative consequences.
According to foreign media reports, the new tax rate will be implemented from November for a period of five years. However, a spokesman for the Ministry of Commerce said on October 4 that the Chinese and European technical teams would continue negotiations on October 7.
tax rate
If the new tariffs take effect, BYD, Geely and SAIC will be levied 17%, 18.8% and 35.3%, respectively. Tesla's tariffs are the lowest, at 7.8%, because, according to the European Commission's investigation, Tesla does not have a joint venture with a Chinese company, but only produces independently in China, so it receives less government subsidies.
On the other hand, all other automakers producing in China are required to pay a countervailing duty of at least 21.3% on their imports into the EU. These include Volkswagen, BMW, and Mercedes-Benz. Depending on the joint venture partner, different tariff rates will apply, and the maximum tax rate of 35.3% will be applied to the joint venture model between Volkswagen and SAIC.
The new tariffs must be superimposed on the original import duty of 10%.
The European Commission has until October 30 to publish its final decision, at which point the tariffs will finally take effect.
This will be preceded by further talks between China and the EU. The European Commission demanded that China guarantee the elimination of subsidies. For European Commission officials, it is not enough to reach agreements with individual car companies.
Is there any room for manoeuvre?
Martin Lukas, director of the European Commission's trade defense department, said at the end ·of September that the European Commission was willing to continue negotiations with China to reach a potential agreement to avoid tariffs even after the vote was passed and the tariffs were implemented. He said at the time that technical negotiations between the EU and China had escalated to almost daily and could continue beyond the end of October.
"After the statutory period, a price commitment or any other solution is still acceptable." Lucas said that Chinese automakers have submitted revised proposals, and although some progress has been made, the proposals have not been accepted so far.
The price commitment refers to the initiative of Chinese automakers to raise prices and control the number of exports when they export to the EU, so as to reduce the "harm" to European companies in exchange for the removal of tariffs by the EU. According to a Reuters report on October 2, people familiar with the matter revealed that one of the options in the negotiations is to calculate the minimum import price based on factors such as the range of electric vehicles, battery performance, and whether they are two-wheel drive or four-wheel drive. Another option would be to commit to investing in the EU during the transition period and setting quotas.
After the European Commission disclosed the final ruling of the case on August 20, the Chinese industry proposed a price commitment solution, but the European side rejected it.
Impact on Chinese and European OEMs
Among Chinese automakers, once the tariffs take effect, BYD will be the most affected. The seal is priced at 45,000 euros in Germany and is comparable to the Tesla Model 3 and several Volkswagen brand models.
Both NIO and XPeng have operations in Europe.
NIO held a European launch conference in Berlin two years ago, and its sales were mainly concentrated in Germany, Netherlands, Denmark, and Sweden, and its sales were not large. On October 4, NIO changed its route and announced its entry into the Middle East and North Africa market, signing a strategic cooperation agreement with strategic investor CYVN to establish a technology research and development center in Abu Dhabi, U.A.E., focusing on intelligent driving and artificial intelligence technology research and development, and further expanding NIO's global R&D layout. NIO and CYVN will also jointly develop a new model for the local market.
NIO will officially launch its business in the Middle East and North Africa region. The business operations will be carried out through NIO's Middle East and North Africa joint venture, a joint venture between NIO and CYVN. The U.A.E. will be the initial market for NIO's Middle East and North Africa companies. Focusing on products, services and communities, the system will launch a system-wide business in the U.A.E. in the fourth quarter of this year.
Xpeng began selling the G9 and other models in Germany, Spain and France this year, and plans to expand to United Kingdom and Italy. Export sales already account for one-tenth of Xpeng's total sales in the third quarter of 2024, and Xpeng's core management is very optimistic about the export business. If business in Europe is blocked, they also start to deploy in regions such as the Middle East.
The Middle East and other regions may become new destinations for Chinese automakers to go overseas, and it is also possible that more Chinese automakers will set up factories in Europe or produce models locally in a cooperative manner.
At the same time that the EU is negotiating countervailing tariffs with China, European auto groups are offering cheaper EV models to fend off imports from China.
The Volkswagen Group has been working hard to transform itself and launched more than 30 new models this year, including the all-electric Porsche Macan and ID.7. In addition, the Volkswagen Group plans to develop and produce a 20,000-euro all-electric model in Europe, but the car will not be available until 2027.
Stellantis, the parent company of the Fiat and Peugeot brands, launched the electric Citroen E-C3 priced at 23,300 euros in early 2024 and has already started selling models in Europe that were jointly developed with Leap.
Renault plans to start deliveries of the R5 E-Tech city car assembled in France this year, priced at around 25,000 euros. Mercedes-Benz Group and BMW released prototypes of the next generation of electric vehicles last year, with BMW having recently seen strong growth and overtaking Tesla for the first time in July to become the leader in the European EV market.
The sluggish demand for pure electric vehicles in Europe is due to a combination of reasons, which has also led to the slow and incomplete transformation of European automakers. The inadequacy of Europe's energy supply network, high EV prices, and the elimination of government subsidies have made it difficult to popularize EV models across Europe. In China, on the contrary, a series of initiatives have contributed to the fact that the country's new energy penetration rate exceeds 50%.