EU Passes Anti-Subsidy Tariff on Chinese EVs, Up to 45.3%; Automakers Like Mercedes, BMW, Geely Oppose

On October 4th local time, the European Union (EU) held a vote on whether to impose a five-year countervailing duty on Chinese electric vehicles. According to a statement released by the European Commission, the proposal to levy tariffs on pure electric vehicles imported from China received the necessary support from EU member states.

The outcome of the vote implies that the European Commission will have the authority to impose tariffs on Chinese automotive companies such as BYD, Geely, and SAIC. Based on information previously disclosed by the European Commission, the additional tariff rates faced by SAIC, Geely, and BYD are 35.3%, 18.8%, and 17%, respectively. Tesla requested a separate review, and its final additional tariff rate stands at 7.8%. The European Commission stated that these tariffs will be imposed on top of the EU's standard 10% automotive tax. When combined, SAIC will be subject to a 45.3% tariff, while Geely and BYD will face tariffs of 28.8% and 27%, respectively, and Tesla will be subject to a 17.8% tariff.

Following the passage of the aforementioned countervailing duty proposal by the EU, various parties have voiced their opinions on the matter. Up to now, China's Ministry of Commerce, the China Chamber of Commerce to the EU, and the China Council for the Promotion of International Trade have all expressed "strong opposition." In terms of automotive companies, Geely Automobile, Mercedes-Benz, and BMW Group have also made their positions clear, expressing attitudes of "opposition," "disappointment," "strong dissatisfaction," and "error" towards the European Commission's move.

Advertisement

On September 7, 2024, at the 27th Chengdu International Automobile Exhibition held at the Western China International Expo City in Chengdu, visitors stopped to watch in front of a certain electric vehicle brand model. Visual China photo.

Opposition to the imposition of additional tariffs

According to Xinhua News Agency, on October 4th, the spokesperson for China's Ministry of Commerce responded to a reporter's question about the EU's vote to pass the final draft of the electric vehicle countervailing case, stating: "Regarding the EU's countervailing case against Chinese electric vehicles, China's position is consistent and clear. China firmly opposes the EU's unfair, non-compliant, and unreasonable protectionist practices in this case and firmly opposes the EU's imposition of countervailing duties on Chinese electric vehicles."

On the same day, the China Chamber of Commerce to the EU expressed strong dissatisfaction with the EU's push for trade protectionist measures. The China Council for the Promotion of International Trade stated that it firmly opposes the EU's disregard for the booming cooperation in the electric vehicle industry between China and Europe, firmly opposes the EU's disregard for relevant facts and investigation rules, refusal to correct erroneous determinations, and firmly opposes the EU's imposition of countervailing duties on Chinese electric vehicles.

In terms of Chinese automotive companies, on October 4th, Geely Holding Group issued a statement expressing: "Geely Holding Group is very disappointed with the decision of the European Commission. The decision to impose countervailing duties is not constructive and will hinder the economic and trade relations between the EU and China, ultimately harming the interests of European businesses and consumers."

Regarding the issue of whether to impose additional tariffs on Chinese electric vehicles, there has been continuous debate within the EU. According to CCTV News, on October 4th local time, Hungarian Prime Minister Orban stated in an interview with local media that he "opposes the EU's imposition of punitive tariffs on Chinese electric vehicles."

The German Federal Minister of Finance, Lindner, also said that it was wrong for the European Commission to "risk in this way" by proposing temporary countervailing duties, and that a trade war with China would be more detrimental than beneficial to the European automotive industry.Several industry insiders previously stated that the European Union's move is not conducive to the transformation and development of the global automotive industry. Following the implementation of the EU's countervailing duties on October 4th, major German car manufacturers also expressed their opposition.

On October 5th, Mercedes-Benz took a stance on the EU's final vote regarding the countervailing duty case against electric vehicles, stating, "We firmly believe that countervailing duties will weaken the competitiveness of an industry in the long run. Free trade and fair competition will bring prosperity, growth, and innovation to all parties. Therefore, we consider the European Commission's proposal to impose countervailing duties to be a mistake, which may lead to far-reaching negative consequences."

BMW Group Chairman Zipse also stated that the EU's decision to vote on October 4th to impose tariffs of up to 45% on Chinese electric vehicles is a "fatal signal to the European automotive industry," and called for a resolution through negotiations as soon as possible.

Fitch Ratings analysts told reporters: "The tariffs imposed by the EU on imported Chinese electric vehicles are unlikely to have a substantial impact on the competitive landscape in Europe in the short term, and potential broader measures will adversely affect the profit margins and cash flows of German car manufacturers."

China-EU negotiations will continue

Since the European Commission launched an anti-subsidy investigation against Chinese-made pure electric vehicles in October 2023, dialogue between the two parties has never ceased.

The aforementioned spokesperson for the Ministry of Commerce said that since the end of June, China and the EU have held more than ten technical consultations at the bureau level and two副部长级 consultations on the electric vehicle countervailing duty case. The China-EU technical teams have conducted six rounds of technical consultations within just 14 days. The Chinese side has repeatedly and fully listened to the demands and opinions of the China-EU industry, demonstrating an open and cooperative attitude throughout the consultations, showing the utmost flexibility.

At present, the EU has expressed its willingness to continue solving problems through negotiations. On October 4th, the EU stated in its published declaration that it will continue to work with China to explore alternative solutions that must fully comply with WTO regulations, adequately address the damaging subsidies identified by the Commission's investigation, and be monitorable and enforceable.

"The China-EU technical teams will continue negotiations on October 7th," said the aforementioned spokesperson for the Ministry of Commerce.

The EU Chamber of Commerce in China also stated: "The China-EU negotiation teams are still in intense negotiations, seeking possible solutions."Recently, several European car manufacturers have collectively expressed their willingness to strengthen cooperation with China in the field of new energy vehicles. For instance, Herbert Diess, Chairman of the Board of Management of Volkswagen AG, has clearly stated that the goal is for Volkswagen AG to become the number one international car manufacturer in the Chinese market by 2030.

Jochen Goller, a member of the Board of Directors of BMW Group, also indicated that China's new energy vehicle industry is currently facing challenges from global trade. BMW supports free trade and is willing to use its influence to maintain the openness of free trade.

"Today, more than ever, it is crucial for the EU and China to maintain dialogue and reach a negotiated solution that serves the interests of both parties. We believe that both sides can find such a solution," said Mercedes-Benz. They also believe that both parties need time to form such a solution, hence they call on the European Commission to postpone the implementation of the measures it has decided on.