The Chinese EV's are destroying the EU car industry. EU would...

The Chinese EV's are destroying the EU car industry.

EU would need 50pc tariffs to curb imports of Chinese EV
Andy Bounds
Updated Apr 29, 2024 – 4.10pm, first published at 3.41pm


Brussels | The EU would need to impose huge tariffs of about 50 per cent to stem the flow of cheap Chinese electric vehicles into the bloc, according to new analysis.
Brussels’ blockbuster anti-subsidy investigation into Chinese electric cars is expected to conclude within weeks, but researchers at the Rhodium Group say any punitive action is likely to be too timid to deter Chinese car makers.

A dancer enlivens the mood at the Auto China motor show in Beijing. EU car makers can’t compete with EV exports from China. AP
“We expect the European Commission to impose duties in the 15-30 per cent range,” the report says. “But even if the duties come in at the higher end of this range, some China-based producers will still be able to generate comfortable profit margins on the cars they export to Europe because of the substantial cost advantages they enjoy.
“Duties in the 40-50 per cent range – arguably even higher for vertically integrated manufacturers like BYD – would probably be necessary to make the European market unattractive for Chinese EV exporters.”
BYD’s Seal U, for example, sells for €20,500 ($33,500) in China and €42,000 in the EU. The estimated profit is €1300 and €14,300 respectively, giving a strong incentive to export, Rhodium says.



Imports already pay a 10 per cent EU tariff rate, amounting to roughly €2100 a vehicle.
“According to our calculations, a 30 per cent duty would still leave the company with a 15 per cent (€4700) EU premium in relation to its China profits, meaning that exports to Europe would remain highly attractive,” the report said.
BYD could even lower its prices to hit its target of capturing 5 per cent of the EU market by 2025 and 10 per cent by 2030. “Many other Chinese EV models would still enjoy a strong EU profit premium,” Rhodium said.
It calculated that the average punitive duty across all sectors where the EU has found subsidies is 19 per cent if the affected companies co-operate, as Chinese car makers BYD, SAIC and Geely have done.
Brussels announced its investigation in October after a surge in imports threatened domestic producers that are switching from combustion engine vehicles to electric ones. Imports of EVs from China, including from non-Chinese manufacturers with plants there, increased from $US1.6 billion ($2.4 billion) in 2020 to $US11.5 billion in 2023.
The market share of Chinese brands rose more than fourfold in that time to 8 per cent last year.


That is set to hit 11 per cent this year, rising to 20 per cent by 2027, according to estimates from Transport & Environment.
German and US car makers, which manufacture in China and sell in the EU, are also vulnerable to higher tariffs. Rhodium says 15 per cent duties would wipe out profits for Tesla’s exports from China to the EU.
Beijing has denounced the investigation as protectionist, saying its companies are simply more competitive.
EU officials told the FT that preliminary duties could come as early as May, although the deadline is July. Permanent duties would have to win the support of a majority of EU member states, and would be imposed in November.
Rhodium said massive investment in factories meant that Chinese car makers were obliged to export to make a satisfactory return.
By 2026, BYD’s annual production capacity in China will reach 6.6 million EVs, up from 2.9 million at the end of 2023. To absorb that capacity domestically, the company would need to more than double its sales in a slowing market.