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China is facing high EU levies on electric vehicle sales, as most member states have approved the imposition of heavy taxes on Chinese electric car imports. The European Union legislators believe that unfair Chinese-state subsidies provided to its auto industry threaten the European automotive sector. As a result, tariffs on Chinese-made electric vehicles are set to increase from 10% to up to 45% for a period of five years.
The decision to impose these tariffs has raised concerns about the pricing of electric vehicles in the EU. The move has divided EU member states, with countries like France and Germany expressing reservations about the potential risks of a trade war with Beijing. China heavily relies on high-tech items like electric vehicles to drive its economic growth, with the EU being its biggest market for electric vehicles.
China’s domestic vehicle sector has seen significant growth over the last two decades, with Chinese brands like BYD expanding into foreign markets. This expansion has caused concerns within the EU that its own automotive firms may struggle to compete against Chinese competitors offering lower prices. The EU has already placed import taxes on Chinese manufacturers at varying levels, and Friday’s vote determined whether these tariffs would be applied for the next five years.
The charges imposed on Chinese electric car manufacturers were based on estimates of the state subsidies each firm received following an EU inquiry. The European Commission imposed tariffs on key Chinese electric vehicle brands such as SAIC, BYD, and Geely. The decision to impose these tariffs has split EU member states, with Germany, a country whose auto sector heavily relies on China, opposing the move.
German automakers have protested against the tariffs, with Volkswagen referring to them as “the wrong approach”. On the other hand, countries like France, Italy, the Netherlands, and Poland have supported the imposition of import duties on Chinese electric vehicles. The European Commission has stated that the EU and China will work towards finding an alternative solution to address the issue of “injurious subsidization” of Chinese electric cars.
The Chinese Commerce Ministry has deemed the duties as “unfair” and “unreasonable”, but discussions are ongoing to resolve the issue amicably. However, there are concerns that China may retaliate with tariffs of its own, which is worrying non-auto industry organizations. A French cognac trade group has expressed concerns that the tariffs may negatively impact their exports to China and has called for a negotiated solution to avoid exclusion from the Chinese market.
In addition to the trade tensions between the EU and China, there are also serious concerns regarding electric vehicle sales in the UK. Battery-electric vehicle registrations in the EU saw a significant 43.9% decrease in August. However, business partnerships and substantial manufacturer discounts in the UK resulted in record-high electric car sales in September.
The Society of Motor Manufacturers and Traders (SMMT) has expressed serious concerns about the slow growth of the electric vehicle market in the UK. The industry has warned that more incentives are needed to encourage consumers to choose electric vehicles to help manufacturers meet regulatory targets. The UK government has announced a ban on new petrol and diesel cars, with Labour aiming to bring this ban forward to 2030.
Electric vehicle sales objectives are crucial for automakers, as at least 22% of cars sold this year must be zero-emission, with a target of 80% by 2030 and 100% by 2035. Manufacturers that fail to meet these quotas may face hefty fines. However, industry executives have raised concerns about the high cost of electric vehicles in the UK, as well as consumer wariness due to rising energy and material prices.
Another obstacle to electric vehicle adoption in the UK is the lack of confidence in the country’s charging infrastructure. Overall, the relationship between the EU and China regarding electric vehicle trade, as well as the challenges faced by the UK in promoting electric vehicle sales, highlight the complexities of the global electric vehicle market. Collaboration and dialogue between stakeholders are crucial to finding sustainable solutions that benefit both consumers and the industry.
