China to investigate EU dairy subsidies after electric vehicle tariffs

The European Union (EU) ha reduced to 9% he tariffadditional on electric vehicles (EV) Teslas made in Chinacompared to the 20.8% previously forecast. This new rate is significantly lower than the 17% to 36.3% range imposed on other Chinese EV manufacturers, which could boost Tesla sales in the region.

Meanwhile, European milk and cheese producers have become the latest target of a latent trade war with China. The Chinese Ministry of Commerce said on Wednesday that it would initiate a investigation about the subsidies awarded by the European Union and the member countries of the EU to the milk productswhich could lead to tariffs on exports to China.

Tariffs on Chinese-made Teslas revised downwards

The revised tariff plan for Teslas made in China is subject to approval of most of the 27 EU member states by 31 October. If approved, the new tariffs will remain in force for the next five years.

The decision is made after Tesla requested an individual evaluation of tariffs imposed by the European Commission on electric vehicles made in China, outlined in July.

The EU believes that Beijing’s subsidies to the industry are “unfair” and would cause “significant harm” to EU car manufacturers. After carrying out its investigation, the Commission concluded that Tesla received less subsidies from the Chinese government.

The car manufacturer United States benefited mainly from battery supplies below market value, as well as advantageous reductions in land use and income tax for exporters in China.

He additional tariff tax is added to the existing 10% applied to Chinese imports of electric vehicles. The EU has also revised tariffs applied to Other Chinese manufacturerssetting them at 36.3% for SAIC Motor, 19.3% for Geely and 17% for BYD, all of them slightly lower than the previous proposals.

China has expressed concern about tariff policy

To Chinese electric vehicle manufacturers who cooperated with the investigation from the EU have been assigned lower tariffs in the proposal, with 21.3% for Dongfeng Motor Group and Nio. Those that did not cooperate could face a tariff of 36.3%.

He Chinese Ministry of Commerce He responded by saying that the EU’s decision was based on “certain facts” unilaterally on the EU side, not on mutually agreed facts.”

China firmly opposes the resolution and has expressed serious concern, claiming that there is insufficient evidence that Chinese imports of electric vehicles have caused “material harm” to EU carmakers.

Chinese exports of electric vehicles to the EU suffer a setback

According to Dataforce, the Registrations of electric vehicles manufactured in Chinasuch as BYD and MG, fell 45% quarter-on-quarter in JulyThe China Passenger Car Association (CPCA) also revealed that exports of Chinese small electric vehicles, including pure electric vehicles and plug-in hybrids, fell 15.2% in June from May.

The exports vehicular Teslamanufactured in China to the EU fell to its lowest level since the third quarter of 2022. In a separate report, the China Chamber of Commerce stated that China’s electric vehicle exports to the EU fell 30% year-on-year in June and decreased by 14.6% in it first semester of 2024 compared to 2023. This decline is believed to be related to provisional additional tariffs EU tariff on electric vehicles made in China.

However, BYDChina’s best-selling electric vehicle brand, has weathered regulatory headwinds and its market share in it EU electric vehicle market ha increased to 8.5% in July. BYD has become a Tesla’s global rival and has overtaken it to become the world’s largest seller of electric vehicles in the last quarter of 2023. Compared with other Chinese EV makers, it faces the lowest tariff in the EU.

The Chinese carmaker expects some of its models to continue to get higher profits in the EU compared to China, even after the imposition of the new tariffs. BYD sells cars in Europe at almost twice the price as in China. In addition, BYD’s technological advantage allows it to reduce costs by up to 20%.

China’s largest seller of electric vehicles has planned to launch its most affordable modelthe Seagull, in Europe next year.

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What do tariffs mean for car prices in Europe?

As ING points out, tariffs will raise the prices of electric vehicles and will slow the move towards net-zero emissions vehicles.

“The EU’s goal of phasing out internal combustion vehicles by 2035 was already facing difficulties. The market share of battery electric vehicles fell from 14.5% in 2023 to 12% in the first four months of 2024. The Additional levies on Chinese EVs could delay availability a wider range of more affordable EVs in Europe.”

ING also noted that electric vehicles in Europe They are still too expensive for average consumers.

“The average prices of sale to the public of electric vehicles in China are significantly lower than in Europe. For example, in Germany, the SAIC MG4 costs 34,900 euros, while in China it costs 109,800 yuan (13,917 euros). However, this price is below the average purchase price of an EV in Europe, as most cars sold in Europe are still premium models.

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“The EU’s proposed measures would make electric vehicles even more expensive and make them less accessible to European consumers,” ING said in a report.