Will there be cheap electric cars with new tariffs in China?

Yesterday’s announcement of higher tariffs on Chinese electric vehicles will allow European manufacturers to electrify at lower voltages and with greater guarantees. Meanwhile, its Asian rivals will have to endure obvious cost increasesand cars. First of all, if they were more opaque or less cooperative with the EU.

From when will the new tariffs be charged?

Brussels has given the affected manufacturers – BYD, Saic (parent of the successful MG) and Geely (with brands such as Volvo or Polestar) – three days to file charges, which could result in the applicable rates being adjusted (or waived). ). The tariffs will take effect on July 5 at the latest. Although they won’t be collected until they become final, which will be decided in November. Meanwhile, brands will have to guarantee this money. But buyers will pay them from the very beginning.…unless the manufacturer anticipates increasing costs at the expense of its profits. According to consultancy Rhodium Group, BYD will make up to 13,000 euros in extra profit by selling its Seal U model in Europe rather than China.

What did Brussels discover?

The commission says China’s battery electric vehicle (BEV) value chain is benefiting from unfair subsidies. In March, He noted that he discovered subsidies that included direct transfers of government funds., government revenues “forgiven or not collected,” and government supplies “at less than adequate consideration.” This practice would be applied with varying intensity among the manufacturers studied, hence the gradation of tariffs, decisions on which were also made on the basis of transparency and information provided by the brands in question.

How will this affect prices?

Brussels proposes that BYD pays an additional 17.4%; Geely is 20% more, and for Saic, which is 100% state-owned, offers a tariff of 38.1%. In addition, the decision to be made with Tesla has not yet been made. In any case, these figures are added to the 10% that any Chinese car already pays.

But It is almost impossible to calculate how this will affect prices, since the basis for applying tariffs is “confidential information”.This is stated by sources consulted by the newspaper. Moreover, the brand may decide to accept this price increase or minimize it, and Brussels’ control will depend on the information it has on production costs, profits, etc. When the Commission began its investigation, it stated that Chinese models are 20% cheaper, than their European counterparts.

Will this mean there will be no more cheap electric vehicles?

No. Citroën, Renault or VW Group have started selling or will sell electric cars until 2026 at a price of 25,000 euros or less.And they are already working on others at the 20,000 euro barrier., a figure that includes models like the BYD Seagull, even taking into account the new tariffs. What there won’t be are mid-size cars like the current MG 4 Electric at an affordable price.

Yesterday Acea and Anfac, associations of automotive employers in Europe and Spain, Yesterday they noted that “free and fair trade is essential for competitive European industry and that it needs a strong industrial strategy for electromobility.” Stopping the Chinese threat is one way to strengthen it… although this will depend on the countermeasures China can take.

How did Beijing react?

In addition to asking the EU to back down, Beijing said it would defend its interests and rights. It is worth remembering here that the Asian giant controls the global market for batteries, raw materials and chemicals necessary for their production.

What impact will this have on sales?

The latest analysis of the global economy by the Kiel Institute predicted that The 20% tariff would reduce the number of Chinese electric vehicles imported into the EU by a quarter, to about 125,000 vehicles.. In addition, it will cost $4 billion (approx. €3,600 million) in a commercial exchange with these companies.

What about the rest of the battery-powered cars that are imported from China?

Other collaborating producers, but which were not included in the sample, They will be subject to a tariff of 21%. There are also many Western brands that produce models of this equipment in this country, always through joint venture with local companies who then export to the EU. This is the case with Volkswagen, BMW, Audi, Mercedes, Dacia and even the Spanish Cupra, which assembles the Tavascan there.

No unanimity within the EU

Germany’s opposition to measures of this magnitude was already known.. For several months he fought (and will continue to do so until November) to prevent it from taking place; or reduce it to a minimum. Chancellor Olaf Scholz, several ministers; The employers’ association of German manufacturers (and several brands) were quick to criticize what they see as a mistake as it “could start a trade war” with the Asian giant. It is also true that its automobile industry is heavily dependent on the local Chinese market. On the other hand, France has always been in favor of tariffs. In Spain, Third Vice President and Minister for Ecological Transition and Demographic Affairs Teresa Ribera yesterday demonstrated in a similar vein whether competition is being distorted. Meanwhile, industry chief Jordi Hereu called on Brussels to show “common sense” when it comes to “evaluating” the protectionism he also considers necessary.

Measures in other regions

A few weeks ago, the US decided to quadruple tariffs on Chinese cars. that they will now have to pay 100%. In fact this meant that The Old Continent remained the only emergency valve due to excess production of battery-powered vehicles that the local Chinese market is unable to absorb. Türkiye announced a 40% tax a few days ago and last year, France decided to exclude assistance for the purchase of electric models for everyone who does not have a European production passport

Alternative: factories in Europe

Local production is the most reliable way to avoid these types of sanctions.. Chery has already announced that it will assemble models in our country; BYD will have a plant in Hungary and is exploring the possibility of building a second one, while Saic (MG) and Dongfeng are exploring the possibility. In addition, there are specific measures such as those of Volvo, which will also produce the EX30 in Belgium and China.

On Wednesday, even before the Brussels proposal became known, the China Passenger Car Association (CPCA) assured that Your companies will retain these investments and “will continue to integrate into local European markets”,