- The Chinese government wants its automakers to put the brakes on their expansion plans into Europe.
- Sales of Chinese EVs in Europe are growing but new levies may put the brakes on its impetus.
- September was the second-best month ever for Chinese EV sales in the European Union.
Most carmakers in China are owned by the state. The Chinese government has a big say in how and where they do business, although they still have some independence. That's posing an issue, now, as the Chinese government isn't happy about the European Union's new import duties on Chinese cars. The country has tried to exert economic leverage agains the EU to get them to drop the tariffs, which will be up to 35% on some vehicles when they take affect in November. But now, Beijing is trying a different strategy: Telling its automakers to slow down their European expansion plans.
The country will surely try to find multiple means of economic retaliation in response, and one way it’s been doing it has been by asking its national automakers to slow down their expansion into the EU. Whether automakers will comply remains to be seen, but it doesn’t look like they have any plans to stop their European charge.
The South China Morning Post reports that the state-owned GAC Group has declared its intention to proceed with its European investment plans, despite government pressure to refrain. This pressure was more a request than a mandatory measure , and there will probably be other Chinese automakers that choose to ignore it unless the tone of the message changes and the state actively intervenes.
But why would Chinese automakers want to reduce their European presence when September of this year was the second-best sales month for Chinese-made EVs on the continent? With 60,517 cars delivered, last month was the second-best for sales after October 2023, with 67,455 deliveries, according to Bloomberg.
Europe's plan to enforce a new import tariff on Chinese EVs starting in November may slow their expansion, but it's unlikely to completely halt it. Considering there was already a 10% import tariff in place, the additional one will bring it to 45%, which is a lot even for Chinese automakers that do a lot of the work in-house and have economies of scale on their side.
The new import duties won’t be the same for all automakers, as they vary based on how much the European Commission assesses that an automaker has been (unfairly in its view) subsidized by the Chinese government.
Aside from encouraging Chinese automakers to reconsider their ambitious expansion plans into Europe, the government has also reportedly looked at other ways it can respond. China is apparently analyzing different EU export goods, and it could impose its own import tariffs to make it unprofitable for European countries to sell in China.
So far only GAC has made its intention of going forward with its plans public. The company has been actively looking for a site to build a factory in Europe. SAIC (owner of the successful MG brand) is also scouting locations for an EV plant, and BYD is already building a factory in Hungary, which should become operational next year.
Stellantis-owned Chinese startup Leapmotor is one step ahead of the larger automakers, and it’s already building the T03 electric city car in Poland alongside Fiat products. Nio was reportedly interested in buying Audi's factory in Belgium but the German automaker has since denied plans to sell the facility whose current only model is the Q8 E-Tron. But with new pressure from the Chinese government, we'll have to see if any of these plans change.
