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Tariffs jolt Chinese EVs as Europe pushes back

David Ijaseun by David Ijaseun
December 25, 2024
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Chinese EVs

Chinese EVs

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Chinese automakers are facing tougher roads in Europe, as new EU tariffs add up to 35% to the cost of imported electric vehicles. This move has slowed their market growth, with November’s EV registrations dropping to 7.4% from 8.2% in October—the lowest level since March, according to Dataforce.

The European Union introduced these tariffs after finding that state subsidies gave China’s EV industry an unfair edge. “Months of negotiations failed to resolve the dispute, forcing Brussels to act,” said Julian Litzinger, an analyst at Dataforce. The new tariffs add to an existing 10% duty, with charges varying based on the automaker’s level of cooperation and subsidy.

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State-owned MG, under SAIC, faced the harshest penalties, now totaling 45%. Once a market leader in Europe, MG saw a sharp 58% drop in registrations year-on-year last month, data from Jato Dynamics revealed. “MG is taking major setbacks, while BYD is stepping up,” Litzinger added. BYD saw a 117% surge in European registrations in November, reaching nearly 4,800 vehicles.

While Chinese carmakers look to expand globally, Europe’s barriers are proving a challenge. November’s overall Chinese EV exports dropped 19% year-on-year, including a 23% fall to the EU, Chinese customs data showed. Germany and France reported declines of more than 50% in Chinese EV registrations, though the UK—outside the EU—saw a 17% gain.

The EU’s efforts reflect broader protectionist policies aimed at safeguarding local automakers. “Battery costs gave Chinese firms a price advantage, but the tariffs have leveled the field,” Litzinger noted. The European auto industry, employing hundreds of thousands across Germany, France, and Italy, is already grappling with a costly transition from combustion engines to EVs.

Despite the challenges, Chinese companies are exploring solutions. BYD is ramping up efforts, and automakers like MG and others are planning to localize production in Europe. However, those initiatives could take years to materialize. Meanwhile, global automakers are reassessing strategies amid EV market uncertainty.

In a sign of the shifting landscape, Japanese giants Nissan and Honda are reportedly considering a partnership to share EV development costs and stay competitive. “The EV transition is no longer inevitable; it’s unpredictable,” Litzinger concluded.

Read more on Chinese competition, EV push spur mass layoffs in Europe’s auto industry

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