Summary
- T&E analyzes the impact of provisional tariffs on China-made EVs and the likelihood of gigafactory investments
- The European Commission has proposed additional import duties on China-made battery electric vehicles to level the playing field
- Initial results for the EU market show a decrease in market share for MG, growth for BYD, and moderate growth for Geely
- T&E predicts a peak in China-made imports this year, followed by a gradual reduction to 18% of BEV sales by 2026
- T&E recommends confirming additional EV import duties alongside the 2025 Car CO₂ target and launching an investigation into battery cells for trade defense measures
Article
The European Commission has proposed additional import duties on China-made battery electric vehicles (BEV) in response to an anti-subsidy investigation. These duties range from 7.8% for Tesla to 35.3% for SAIC’s MG, with the aim of leveling the playing field for European carmakers as they increase their production of electric vehicles. The preliminary tariffs have been in effect for two months and are expected to be confirmed by member states by the end of October. The impact of these tariffs and the future of Europe’s EV trade policy are being analyzed.
The initial results of the tariffs on the EU market have shown mixed outcomes for different Chinese BEV manufacturers. MG has experienced the largest drop in sales, with a 41% decrease in market share, while BYD has seen an 81% growth in market share. Geely falls in between, with a 58% increase in market share. Based on these trends and sales forecasts by GlobalData, T&E has updated its China-made BEV imports forecast to 2027, predicting a peak in imports this year followed by a gradual reduction to around 18% of BEV sales by 2026.
Despite the tariffs slowing some growth in Chinese BEV imports, European automakers have been slow to respond with competitive offerings. Affordable BEVs are only now entering the market, coinciding with the 2025 car CO2 target. Higher tariffs on EVs can be justified as part of a coherent industrial policy, especially as more European EV models become available. However, if EU CO2 targets are weakened, tariffs could limit consumer choice while domestic manufacturers continue to sell internal combustion engine vehicles. T&E estimates that China-made EVs could account for 27% of all BEVs available in Europe in a scenario where current EV sales stagnate.
In addition to focusing on EVs, T&E emphasizes the importance of supporting homegrown battery makers in the EU. Delays and setbacks in the battery market have been driven by the global dynamics of cheap, high-quality Chinese batteries. T&E warns that without action, just 10% of announced battery gigafactory plans may proceed, with 60% at risk of being scrapped, leading to a loss of investments and potential jobs. T&E recommends confirming the additional EV import duties alongside the 2025 Car CO2 target, launching an investigation into battery cells for trade defense measures, and implementing the EU Battery Fund and carbon footprint provisions for clean local manufacturing.
Overall, T&E advocates for a comprehensive approach to supporting the growth of the EV market in Europe, including tariffs on Chinese EVs, incentives for local battery production, and policies that align with emissions targets. By addressing these key areas, the EU can ensure a sustainable and competitive EV market while supporting job creation and investments in the clean energy sector.
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