Following an extensive investigation, the European Union has announced the imposition of extra tariffs on electric vehicles (EVs) imported from China. The decision comes in response to what the EU perceives as unfair support from Beijing for companies that undercut European carmakers.
The additional tariffs range from 17.4% to 38.1%, on top of the existing 10% duty levied by the EU. This move is expected to impact Chinese EV makers differently based on the level of the tariff and each company's cost structure.
Market leader BYD, facing the lowest additional levy of 17.4%, may emerge as a relative 'winner' in this situation. The company is already building a factory in Europe and could potentially cut prices to gain market share in the region.
On the other hand, state-owned carmaker SAIC is facing a significant challenge with a 38.1% additional tariff, prompting analysts to describe its situation as 'disastrous.' Geely, China's fourth-largest NEV retailer, faces a 20% additional duty, impacting its margins.
Tesla, which exports from China to Europe, may also be affected by the new tariffs. The European Commission has indicated that Tesla could receive an individually calculated duty rate in the future.
The EU's move is likely to accelerate Chinese carmakers' efforts to establish factories in Europe. BYD has already announced plans to build an EV factory in Hungary, becoming the first major Chinese automaker to manufacture passenger cars in Europe.
While the tariffs may lead to disruptions in the existing manufacturing landscape, they could also pave the way for more competition and the establishment of European-manufactured electric vehicles by Chinese companies.
Despite hints of possible retaliation from Beijing, analysts believe that a full-blown trade war is unlikely, as both sides have much to lose. The provisional tariffs are set to be introduced on July 4 unless mutual agreement is reached through discussions with Chinese authorities.
