Translated by Federico Emanuele
On October 4, European countries voted on increasing tariffs on Chinese-made electric vehicles. In the absence of a qualified majority, with Germany, Hungary, Malta, Slovenia, and Slovakia opposing and 12 other countries abstaining (including Spain, Sweden, Finland, Luxembourg, and Portugal), President von der Leyen broke the deadlock by exercising the Commission’s exclusive power over trade policy. As a result, new import tariffs on the Asian giant’s green vehicles came into effect on October 31 and will remain active for five years.
The imposition of this anti-China measure followed a year-long anti-subsidy investigation into Chinese battery electric vehicles sold in the European market. The investigation, formally launched by the Commission on September 13, 2023, aimed to protect the single market from potential internal distortions that could disadvantage European manufacturers. It stemmed from suspicions that the competitiveness of Chinese cars was due to their artificially low prices, maintained through substantial subsidies granted by the upper echelons of the Communist Party leadership.
With the new tariffs—added to the existing 10% duties and varying across different automakers—purchasing Chinese-made electric vehicles can now cost up to 45% more. As expected, the new Commission measure initially led to a sharp decline in battery electric vehicle sales. In October, sales dropped by 40%, while in November, only a quarter of the electric cars sold in the previous year were purchased. However, surprisingly, data published by China’s General Administration of Customs showed that in December 2024, 32,849 Chinese electric vehicles were sold to European countries, an 8.3% increase compared to the same period in 2023.
China not only leads the global ranking for car exports, having overtaken Japan in 2023, but according to the South China Morning Post, it is also expected to retain its position as the top exporter of electric vehicles in 2025, a title it claimed after surpassing Germany last year. According to a forecast by Hua Chuang Securities, shipments of Chinese-made and assembled cars could exceed 5.58 million units in 2025, marking a 14% increase from 2024.
For Beijing, access to international markets is crucial, as it helps reduce the domestic overcapacity of its automotive industry. The government’s significant investments in electric vehicle production have stimulated the entry of many players into this specific market. Not only have specialized green technology companies like the well-known BYD emerged, but traditional automakers, both state-owned and private, have also dedicated part of their production to electric vehicles. Additionally, companies specializing in other sectors, such as Huawei and Xiaomi, have decided to create their own electric car models. As a result, China, unable to absorb the supply domestically, seems unwilling to give up its business with European countries in the automotive sector. On the contrary, many automakers are implementing strategies to mitigate, bypass, or counteract the negative impact of tariffs. SAIC Motor, for example, is diversifying its production by introducing hybrid models, which are exempt from tariffs. Geely Automobile Holdings, China’s second-largest car manufacturer, believes that the 18.8% tariffs imposed by Brussels will not hinder its global sales, which are expected to surpass those of 2024. Therefore, it is focusing on an asset-light strategy aimed at forming partnerships with local players.
It will be interesting and useful to monitor the evolution of the consequences of the EU’s tariff barriers and the outcomes of the Chinese automakers’ response strategies.
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