The European Union announced big tariff hikes on Chinese-made battery electric vehicles, including China EV makers such as BYD, but also foreign automakers such as Tesla.
The European Union provisionally will impose additional tariffs of up to 38.1% on Chinese EVs starting in July. That's on top of the current 10% duties. The European Commission "provisionally concluded that the battery electric vehicles value chain in China benefits from unfair subsidization, which is causing a threat of economic injury to EU BEV producers," it said.
Specifically, a 17.4% tariff will imposed battery electric vehicles (BEVs) on EV giant BYD, 20% on Geely, which owns Zeekr, and 38.1% on state-owned SAIC.
All three have been "sampled" by the EU. For other automakers, they'll receive an average duty of 21% if they cooperate and 38.1% if they do not.
The tariffs will affect foreign automakers that export Chinese-made EVs as well, including Tesla.
"Following a substantiated request, Tesla may receive an individually calculated duty rate at the definitive stage," the Commission noted.
Tesla exports the Model 3 and some Model Y vehicles from its Shanghai plant to Europe. It could set up the Berlin factory to make the Model 3 locally, but that would also leave the Shanghai plant with further excess capacity.
BYD Less Impacted?
Notably, the tariffs do not appear to affect plug-in hybrids. That would be good news for BYD, which is exporting PHEVs as well as BEVs to Europe.
BYD plans to build a plant in Hungary, but it may not be ready until 2027. The Chinese EV and battery giant will open a plant in Thailand by June 30, with a Brazil factory starting up in early 2025. Those are aimed at local or regional demand, but BYD could choose to export from those plants to Europe to sidestep the new tariffs.
BYD also sells its vehicles at a substantial premium in Europe, even more than in other export markets. So it could absorb the higher BEV tariff and likely still turn a profit in Europe.
Nio and XPeng sell some vehicles in Europe but have no EU factories planned. The size of sales and the cost of building another factory in the EU may substantially limit sales in Europe long term.
Germany, Sweden and Hungary had objected to the new EU tariffs, but need 11 more EU nations to overturn the European Commission's decision. EU states will be asked to vote on the tariffs by Nov. 2.
China has said it could respond.
The Biden administration recently hiked U.S. tariffs on Chinese EVs to 100%.
EV Stocks
Nio stock fell more than 3%, while XPeng edged lower. BYD stock, which trades over the counter in the U.S., is not yet active.
Tesla stock lost a fraction.
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