Europe approves new tariffs on Chinese electric cars, but the last word has not yet been said

In this Friday’s vote, The European Commission has achieved the necessary support for the proposal to apply additional tariffs on Chinese electric vehicles. Although this measure will come into force at the end of October this month, the final word has not yet been spoken.

In a brief official statement, the European Commission said today a decisive step forward has been taken towards completing a process that began in September 2023, when it announced an investigation into combating the massive arrival of Chinese electric vehicles in Europe.

Euroactiv reports that 10 EU countries have voted to apply new tariffs on electric vehicles from China. At the same time, 5 were against, and the remaining 12 abstained.

Among the countries that have expressed their rejection, Germany stands out, which is not surprising. Some of its auto industry players, such as Volkswagen and BMW, have direct ties to China and are among those affected. This is because the tariffs affect not only Chinese brands, but also models from Western brands that are produced by the Asian giant.

Europe’s new tariffs on Chinese electric vehicles will not affect all manufacturers equally. Well, they will vary from 17% to 35.3% depending on each case.. Added to this is the 10 percent tax that the European Union already levies on car imports.

Thus, the entry of Chinese electric vehicles into Europe under the most extreme scenarios will cost up to 45% more. Voices against this decision were not long in coming. According to ReutersOliver Zipse, chairman of the board of management of BMW AG, said the tariffs were a “fatal signal” for the European auto sector.

Europe has free rein to impose tariffs on Chinese electric cars, but wants to negotiate

Thanks to the support achieved in this Friday’s vote, the European Commission has a free hand to apply new tariffs on Chinese electric vehicles. However, the authorities confirmed that ready to negotiate some alternative with the Asian giant.

“[…] “The EU and China continue to work hard to find an alternative solution that is fully WTO compliant, adequate to address the harmful subsidies identified by the Commission’s investigation, verifiable and feasible,” the official statement said.

Although no further official details were provided about what the alternative to the new tariffs might be, Reuters indicates that one of the options would be enter minimum selling prices. That is, Europe sets a lower price limit that Chinese electric cars will not be able to overcome. It remains to be seen whether China is willing to make these types of concessions.

European authorities have been paying attention for quite some time to the impact of subsidies that the Chinese government allocates to the development, production and marketing of electric vehicles and their main components. Both the European Union and the United States believe this has opened the door to unfair competition.

According to a recent report by the Center for Strategic and International Studies, between 2009 and 2023 China allocated at least $230.8 billion in government assistance to the electric vehicle industry.

Some Chinese electric vehicle makers have already begun looking for alternatives to avoid new tariffs. XPengfor example, it confirmed that it plans to build a modern factory and data center in Europe. A plan that will also help you expand regionally. Let’s not forget that this company, which recently entered Spain, has a direct connection with Volkswagen.