The EU Will Impose Punitive Tariffs on Chinese Electric Cars

The European Commission has initiated an investigation this week to determine whether tariffs should be imposed to protect the European Union from the import of Chinese electric vehicles (EVs) that benefit from state subsidies.

– “Global markets are now flooded with cheaper electric cars. Their prices are artificially maintained by huge state subsidies,” said European Commission President Ursula von der Leyen.

European car manufacturers have realized that competing with cheap Chinese electric cars is extremely difficult, as consumers prefer cheaper models, leaving those in Europe unclear about what they should do.

While they figure out what and how, Chinese vehicle manufacturers are attacking foreign markets as competition at home has increased while growth has slowed down. Therefore, expansion into other markets becomes imperative. Chinese car exports rose by 31 percent in August after a jump of 63 percent in July, according to data from the China Passenger Car Association (CPCA).

Of the new electric vehicles sold in Europe this year, 8 percent were produced by Chinese brands, an increase from 6 percent last year and 4 percent in 2021, according to automotive consulting firm Inovev.

Shares of Chinese electric vehicle manufacturers fell after the EU announced possible tariffs. BYD shares traded 4.5 percent higher before the news, then closed down 2.8 percent. Nio fell by 1 percent, and Xpeng by 2.5 percent.

In April, Nio’s founder stated that Chinese electric vehicle manufacturers should prepare for the possibility of protectionist policies against them from foreign governments, and he was clearly right.

Von der Leyen emphasized the importance of electric vehicles for the EU’s ambitious environmental goals.

The Commission is launching an investigation into subsidies for electric vehicles coming from China. Europe is open to competition. Not a race to the bottom,” she said in the European Parliament.