On June 12, the European Commission announced that if a solution cannot be reached with China, the plan to impose temporary countervailing duties on electric vehicles imported from China will be implemented from July 4. The European Commission said it would impose additional countervailing duties of 17.4%, 20% and 38.1% on the three companies sampled – BYD, Geely Automobile and SAIC. an average of 21% countervailing duty on EV manufacturers that participated in the survey but were not sampled; An additional 38.1% countervailing duty will be imposed on EV manufacturers that fail to cooperate with the investigation.
Currently, the European Union imposes a 10% tariff on all imported vehicles. With the addition of the countervailing duties, BYD's EVs will be subject to tariffs of 27.4% for exports to Europe, 30% for Geely Automobile, and 48.1% for SAIC.
Companies that have not been sampled include Aiways, JAC, BMW, Chery, FAW, Changan, Dongfeng, Great Wall, Leap, Nanjing Jinlong, NIO, Tesla and Xpeng, which are subject to an additional 21% countervailing duty, or a final 31% tariff. For other companies that do not cooperate with the investigation, they will have to pay tariffs of up to 48.1%.
Regarding the European Commission's move to impose tariffs on Chinese electric vehicles, the Ministry of Foreign Affairs and the Ministry of Commerce have responded, saying that the countervailing investigation is a typical protectionism. At the same time, BMW, Volkswagen, Mercedes-Benz and other German car companies, the European Union-China Chamber of Commerce, the Kiel Institute for the World Economy and other institutions, as well as SAIC and other concerned enterprises, also spoke out intensively at the first time to clarify their opposing views.
On the day the EU announced the tariffs, BMW Group Chairman Zipzer said that the European Commission's decision to impose tariffs on Chinese electric vehicles was wrong. The imposition of tariffs will hinder the development of European automakers and harm Europe's own interests. Protectionism is bound to trigger a ripple effect: tariffs in response to tariffs, and isolation in lieu of cooperation. For the BMW Group, protectionist measures such as increasing import tariffs will not help companies improve their global competitiveness.
On the same day, Volkswagen China said that free and fair trade and open markets are the foundation for global prosperity, job security, and sustainable growth. As a global company, the Volkswagen Group supports and advocates for an open, rules-based trade policy. In the long run, the imposition of countervailing duties will not be conducive to the competitiveness of the European automotive industry. What Europe needs is a regulatory environment that facilitates the automotive industry's transition to electrification, climate neutrality. "We are confident in our products and our ability to innovate. The Volkswagen Group is actively facing an increasingly competitive international environment, including in the Chinese market. Competition will be an opportunity for growth and will benefit our customers. ”
Mercedes-Benz Group said it has always supported free trade based on WTO rules, including the principle that all market participants should be treated equally. Free trade and fair competition will bring prosperity, growth and innovation to all parties. If protectionist trends are allowed to rise, there will be negative consequences for all stakeholders.
The Chinese Chamber of Commerce in the European Union believes that the EU's tariffs on Chinese electric vehicles will not only seriously damage the legitimate rights and interests of Chinese and European automobile companies and automotive supply chain enterprises, distort the fair competition environment of Chinese electric vehicle companies in the European market, but also impact the normal economic and trade exchanges between China and Europe in the automotive and related fields, and its "spillover effect" will bring challenges to China-EU economic and trade relations and bilateral relations.
"For most Chinese automakers, the European tariff of more than 10% is in the high range, which will have a direct negative impact on their exports to Europe. The current temporary tariff range of 17.4%-38.1% represents severe barriers to market access. The Chinese Chamber of Commerce in the EU said.
According to an analysis report released by the Kiel Institute for the World Economy in Germany, if the EU imposes a 20% import tariff on Chinese-made electric vehicles, the number of Chinese-made electric vehicles imported by the EU will be reduced by 1/4, and the related trade losses will be close to 4 billion US dollars. Now it seems that the associated losses could be even greater.
As the company concerned, SAIC Motor also issued a public statement. SAIC said it will closely monitor the development of the situation and take all necessary legal and commercial measures to effectively protect its legitimate rights and interests and the interests of its global customers. At the same time, he called on the European Commission to carefully consider its decision and engage in constructive dialogue with global automotive industry partners, including China, to jointly find solutions that promote fair competition and sustainable development.
Some analysts believe that the implementation of tariffs may lead to an increase in the price of electric vehicles exported by China in Europe, which in turn will affect sales. In addition, if Chinese automakers choose to cut prices to maintain market competitiveness, it may compress the purchase price of power batteries, putting pressure on the profitability of Chinese power battery companies. At the same time, China's EV exports may be suppressed, affecting the international layout and earnings of car companies.
The challenges are clear, how should Chinese automakers respond?
Great Wall Motors and NIO have already taken relevant countermeasures: before the boots hit the ground, Great Wall Motors has already taken precautions and decided to close its European headquarters in Munich, Germany, at the end of August, when Great Wall Motors' European branch will fire all employees, including the management team; The "Firefly", NIO's third brand, which was originally planned to be released in Europe, changed its release strategy and changed its debut to China.
At the "2024 China Automotive Chongqing Forum" held not long ago, Deloitte China Chief Economist Xu Sitao also sounded the alarm for Chinese car companies. He pointed out that although Europe and the United States are now imposing tariffs on Chinese auto exports, Chinese companies must be aware that this situation is likely to happen in other industries in the future.
"In 1995, Japan's GDP was about twice that of China. Today, Japan's economy is less than 40 percent the size of China. Especially after the epidemic, many countries have formulated new industrial policies, and high tariffs will not only appear in Europe and the United States, but also in some other countries and regions. ”
Looking at the long term, Xu Sitao's suggestions are: first, it is recommended to avoid the trade war that intensified back then; Second, Chinese companies need to realize that tariffs are not a temporary phenomenon, and that the ultimate solution to the problem is to turn Chinese companies into real local enterprises. "In order to accelerate the process of going overseas, Chinese companies need to do a good job of localized operations, not just limited to assembly and OEM." Xu Sitao emphasized.