Summary
- China is pressuring its automakers to pause expansion in the European Union due to the trade conflict over electric vehicles
- EU tariffs on Chinese electric cars vary by manufacturer, with some tariffs up to 37.6%
- Dongfeng Motor Group has halted plans to manufacture cars in Italy due to Beijing’s warnings
- European Commission approved increased tariffs on made-in-China electric cars, up to 45%, citing unfair subsidies
- BYD is moving forward with plans to build a factory in Hungary to bypass EU tariffs and also considering a plant in Turkey or Mexico
Article
China is pressuring its automakers to pause expansion in the European Union due to escalating trade conflicts over electric vehicles. Beijing is advising manufacturers to delay active searches for production sites in the EU and signing new agreements while negotiations over EU tariffs on Chinese electric cars continue. The EU tariffs vary from manufacturer to manufacturer and are in addition to an existing 10% tariff, with Tesla seeing a reduction from 20.8% to 9%.
Dongfeng Motor Group, owned by the Chinese government, has already halted plans to potentially manufacture cars in Italy in response to the warnings. This decision is seen as a setback for Italy’s efforts to attract more automobile manufacturing to the country. The EU imposed provisional countervailing duties on imports of battery electric vehicles from China due to alleged unfair subsidization, leading to threats of economic injury to EU producers. China denies the claim and has threatened its own duties on European products.
Chongqing Changan Automobile Co., a state-owned carmaker, canceled an event to launch its brand in Europe due to ongoing tariff negotiations. Companies like Chery have moved their plans to build EVs in Spain back due to the EU’s tariff decision. The EU and China have pledged to work towards an alternative agreement that would avoid the need for levies. The discussions around tariffs have been met with silence from the involved parties.
The decrease in profits from China has had a significant impact on major German automakers, with Volkswagen potentially facing factory closures in Germany due to diminishing profits. China’s directive for automakers to pause expansion in the EU is not mandatory but could have significant consequences for those who do not comply. China also threatens its own duties on European products in response to the EU tariffs on Chinese electric cars.
BYD is moving forward with plans to build factories in Hungary and Turkey to bypass the EU tariffs. China’s rapid transition to battery-powered cars and plug-in hybrids has led to a decline in sales for German automakers in the region. The ongoing tariff wars between different countries could escalate, especially if the upcoming US election leads to policy changes. Chinese automakers are seen as an existential threat to legacy automakers in the EU, US, and Canada.
Overall, the trade conflicts surrounding electric vehicles and tariffs between China, the EU, and other countries are complex and have wide-ranging implications for the global automotive industry. The push towards battery-powered cars in China and Europe, the imposition of tariffs, and the responses from different automakers highlight the shifting landscape of the industry. These developments indicate a bumpy road ahead for the industry as it navigates economic and geopolitical tensions while transitioning to a cleaner energy future.
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