Chinese EV makers shielded by hefty margins as EU unleashes tariff blitz

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The EU will slap additional tariffs on Chinese EVs, but they will not be enough to deter the carmakers as they have a huge production cost edge over their European rivals

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This photo taken on September 11, 2023, shows BYD electric cars awaiting to be loaded onto a ship at the international container terminal of Taicang Port at Suzhou Port, in China’s eastern Jiangsu Province. Photo: AFP

Daniel Renin Shanghai

Published: 3:00pm, 25 Jun 2024Updated: 9:59am, 27 Sep 2024

Chinese-made electric cars will leverage on their low cost structures and extend their market share in Europe despite the EU’s punitive tariffs of up to 38 per cent, and any moderation in the trade dispute would be the icing on the cake for the world’s largest car exporting country.

The European Union (EU), following a nine-month anti-subsidy investigation, announced on June 12 that it would slap additional tariffs from 17.4 per cent to 38.1 per cent on Chinese-made pure EVs, which will provisionally come into effect on July 4.

Analysts said the duties, in line with expectations, are not enough to shut Chinese EVs out of the EU since BYD and some of its domestic peers enjoy a huge production cost advantage over their European rivals.

The rates will be on top of the existing 10 per cent tariff that is applied to pure electric cars made in China. Plug-in hybrid vehicles and battery car components are exempt from the additional levy.

“The additional tariffs will not deter Chinese EV makers since Europe is deemed as an overseas market with strategic importance to them,” said Gao Shen, an independent analyst in Shanghai. “Beijing’s talks with EU officials may also help at least lower the rates.”

This photo taken on Feb. 15, 2023 shows a factory of Chinese electric vehicle (EV) maker Li Auto Inc. in Changzhou, east China’s Jiangsu Province. Photo: Xinhua

China overtook Japan to become the world’s largest vehicle exporter last year as its car assemblers shipped a total of 4.91 million units abroad, up 58 per cent from 2022. Out of these, 1.2 million were powered by batteries, an all-time high after posting a 77 per cent year-on-year jump.