Summary
- New tariffs introduced on Chinese-made EVs in July raised duties up to 48%
- Chinese automakers saw a decline in EV registrations across Europe in July
- Incentives continue to play a role in EV sales, with Germany seeing a decline after removing incentives
- Chinese carmakers rushed to beat the tariff deadline, leading to fewer EVs to sell in July
- BYD Auto is expanding its European presence to potentially avoid the new tariffs
Article
New tariffs introduced on 5 July have significantly impacted Chinese automakers in the electric vehicle (EV) market as duties on Chinese-made EVs have increased to as high as 48%. This has led to struggles for automakers to adjust to the new tariffs, resulting in fewer electric cars being registered across Europe in July. Brands such as SAIC Motor Corp’s MG and BYD, which accounted for 9.9% of EV registrations in the region, experienced a decline from the previous year. The decline in EV registrations mirrors a broader slump in EV sales, with Chinese companies registering less than 14,000 EVs across Europe in July, down from more than 23,000 in June.
The introduction of these tariffs has stirred trade tensions between China and the EU, with China recently announcing evidence of brandy dumping from the EU. The EU’s EV duties are set to become permanent in November, further escalating the trade dispute. Incentives, or lack thereof, continue to play a significant role in EV sales, as seen in Germany where EV sales declined by 37% in July following the removal of incentives last year. Conversely, in countries like Belgium and Denmark where EV incentives remain in place, demand for battery-powered cars continues to grow.
Chinese automakers are attempting to navigate the new tariff pressures by rushing to beat the deadline and deliver as many EVs as possible before the new duties took effect in July. For example, SAIC Motor Corp’s MG pressed over 13,000 electric MGs into the hands of European dealers in June. Similarly, BYD Auto doubled its European presence in July compared to the previous year, despite a 5.5% sequential drop in sales. To mitigate the impact of the tariffs, BYD Auto is building plants in Hungary and Turkey that will allow them to bypass the new duties once operational.
The decline in EV registrations in Europe due to the new tariffs has underscored the importance of incentives in driving EV sales. Countries like Germany, which saw a significant decline in EV sales following the removal of incentives, highlight the impact of government support on consumer demand for electric vehicles. As trade tensions between China and the EU continue to escalate, with retaliatory probes being initiated, the EV market faces further uncertainty. It remains to be seen how Chinese automakers will adapt to the new tariff landscape and whether incentives will continue to be a crucial factor in driving EV sales in the future.
In conclusion, the new tariffs introduced on Chinese-made EVs in July have had a significant impact on the EV market in Europe, with Chinese automakers experiencing challenges in adjusting to the new duties. The decline in EV registrations and sales reflects broader issues in the EV market, exacerbated by trade tensions and the removal of incentives in certain countries. Chinese automakers are working to overcome these challenges by rushing to deliver EVs before the tariff deadline and exploring alternative strategies such as building plants in other locations to avoid the new duties. Incentives will continue to play a crucial role in driving EV sales, highlighting the importance of government support in promoting the adoption of electric vehicles.
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