EU plans to tax Chinese electric vehicles up to 36% over five years

The European Union plans to impose a tax of up to 36% over five years on imports of Chinese electric vehicles unless Beijing offers an alternative solution, the European Commission announced on Tuesday.

These tariffs, which are in addition to the 10% rates already applied to vehicles manufactured in China, will come into force by the end of October and will replace the temporary rates decided in July, set at 38%, the Commission said in a statement.

The Commission has declared itself “open” to dialogue and any other alternative solution from Beijing to avoid these taxes, which have been criticised by some Member States, such as Germany and Sweden.

Shortly afterwards, the Chinese Chamber of Commerce in the EU expressed in a statement “its deep dissatisfaction and firm opposition to the protectionist approach” of the Commission and warned of the danger of “exacerbating trade tensions between the EU and China”.

The European Commission also announced that it will not collect the provisional fees that had come into force on 5 July. The money will remain in a frozen account and will later be returned.

These new rates will be definitively adopted before November unless a qualified majority of members (15 countries representing 65% of the European population) opposes them.

Brussels will impose additional tariffs of 17% on the manufacturer BYD, instead of the 17.4% provided for in the provisional rate decided last month; 19.3% on Geely (compared to 19.9%) and 36.3% on SAIC (compared to 37.6%).

The remaining manufacturers will be subject to an average additional tax of 21.3%, up from 20.8% decided in July, if they cooperated with the investigation; and 36.3% if they did not (compared with the 37.6% planned a month ago).

Europe’s leading car industry in petrol and diesel engines fears its factories will disappear if it fails to stem the arrival of Chinese electric models. Beijing has long taken the lead in investing in batteries.

In the EU, the market is booming. The sale of new internal combustion engine vehicles is expected to cease by 2035, and Chinese electric vehicles currently account for 22% of the European market, compared with 3% three years ago, according to industry estimates. Chinese brands account for 8% of the market.

The EU is also planning a 9% tax for five years on imports of Tesla brand electric cars made in China.

This rate is much lower than the one initially envisaged by Brussels for Chinese electric vehicles because Tesla receives fewer subsidies in the Asian giant, the European Commission said.

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