As widely expected, the European Union will impose significant tariffs on imports of Chinese battery-powered EVs. However, the tariffs will not be uniform and will vary from company to company.
Naturally, China is upset by the news, especially as the EU claimed that Chinese vehicles benefit “heavily from unfair subsidies” and pose a “threat of economic injury” to EV producers in Europe (most of whom operate in China).
On a preliminary basis, the EU Commission, the executive arm of the EU, concluded that the battery electric vehicle value chain in China “benefits from unfair subsidisation” and pronounced that it is in the EU’s interest to impose “provisional countervailing duties” on BEV imports from China.
The additional tariffs result from an EU probe started last October. According to Wednesday’s announcement, the tariffs will apply at varying rates, depending on the producer of BEVs, or battery-powered EVs.
The tariffs could be as high as 48% and as low as 20%. There seems to be no rhyme or reason to the EU’s decision to set varying tariffs.
Reports indicate that the tariffs do not cover conventional hybrids like those Toyota is promoting with its closed-loop regenerative technology, nor do they cover Plug-in Hybrids (PHEVs) such as those BYD is aggressively pushing into Chinese and export markets this year.
BYD is making and selling more PHEVs than BEVs, marking a major switch in strategy for 2024. With a claimed recharging range of up to 2,000 kilometers, but more than 1,600 kilometers, this technology will evade the tariffs.
It will be much easier for BYD to switch to exporting more PHEVs into Europe than BEVs, which can be sent to markets like Australia, New Zealand, South America, Asia, and Africa, as well as being pushed deeper into the huge Chinese market.
Other Chinese EV makers have been slow to diversify into PHEVs in addition to their basic BEV models, but the tariffs will likely accelerate this shift.
Elon Musk’s Tesla, though stuck with its BEVs, should be able to avoid the tariffs once it gets its German factory sorted out.
While the new duties are currently provisional, they will be introduced from July 4 if talks with Chinese authorities fail to reach a resolution, the EU Commission said in a statement.
Definitive measures will be implemented within four months of the imposition of provisional duties. At the moment, the provisional duties are considerably less than the 100% tariffs the Biden Administration is planning in the US.
“The influx of subsidised Chinese imports at artificially low prices therefore presents a threat of clearly foreseeable and imminent injury to EU industry,” the Commission noted.
Before Wednesday’s announcement, the EU had imposed a 10% tariff on Chinese EVs, and China had already imposed a 15% tariff on European EVs.
The EU will impose a 38.1% tariff on battery electric vehicle (BEV) producers who did not cooperate with its investigation, and a lower 21% duty on carmakers in China who complied but have not been “sampled.”
Main Chinese BEV producer BYD was hit with a 17.4% tariff, and Geely was given a 20% duty. The EU has also imposed its 38.1% tariff on the autos firm SAIC. All three producers were sampled in the EU probe, which is ongoing.
Elon Musk’s Tesla, which has a gigafactory in Shanghai, may “receive an individually calculated duty rate at the definitive stage,” following a “substantiated request,” the Commission said.
However, this doesn’t seem to impact exports of Chinese-made hybrids, such as plug-ins made by BYD and Geely.