Asia Tech Wire (June 13) -- The European Commission announced on Wednesday that it will impose tariffs of up to 38.1% on electric vehicles imported from China starting next month, a move likely to provoke retaliation from China.
Below are the detailed tariff rates each company will face:
BYD (002594.SZ): 17.4%
Includes:
BYD Auto Co Ltd
BYD Auto Industry Co Ltd
Changsha BYD Auto Co Ltd
Changsha Xingchao Auto Co Ltd
Changzhou BYD Auto Co LtdFuzhou
BYD Industrial Co Ltd
Hefei BYD Auto Co Ltd
Jinan BYD Auto Co Ltd
Geely (0175.HK): 20%
Includes:
Asia Euro Automobile Manufacture (Taizhou) Co Ltd
Chongqing Lifan Passenger Vehicle Co Ltd
Fengsheng Automobile (Jiangsu) Co Ltd
Shanxi New Energy Automobile Industry Co Ltd
Zhejiang Geely Automobile Co Ltd
Zhejiang Haoqing Automobile Manufacturing Co Ltd
SAIC Group (600104.SS): 38.1%
Includes:
SAIC MAXUS Automotive Co Ltd
SAIC Motor Corp Ltd
Nanjing Automobile (Group) Corp
SAIC Volkswagen Automotive Co Ltd
SAIC GM Wuling Automobile Co Ltd
SAIC General Motors Co Ltd
Other companies the Commission said cooperated: 21%
Include:
Aiways Automobile Co Ltd
Anhui Jianghuai Automobile Group Corp Ltd (600418.SS)
BMW Brilliance Automotive Ltd
Chery Automobile Co Ltd
China FAW Corp Ltd (SASAAW.UL)
Chongqing Changan Automobile Co Ltd
Dongfeng Motor Group Co Ltd (600006.SS)
Great Wall Motor Co Ltd (601633.SS)
Leapmotor Automobile Co Ltd (9863.HK)
Nanjing Golden Dragon Bus Co Ltd
NIO Holding Co Ltd (9866.HK)
Tesla (Shanghai) Co Ltd
XPeng Inc (9868.HK)
All other companies: 38.1%
The European Commission noted that when the final tariffs are implemented in November, there might be a separately calculated tariff rate for Tesla's electric vehicles produced in China.
Analysts believe the decision to impose tariffs on Chinese electric vehicles could have significant implications for European automakers. A potential trade war could harm these companies' operations in China and affect their imports from China.
The EU decision has caused concern among German automakers. BMW CEO Oliver Zipse called it a wrong approach.
Despite the high tariffs, which could amount to billions of euros, it is unlikely to deter Chinese automakers from exporting to Europe, as they can still profit.
Following the announcement, most Chinese automakers remained silent, but EV manufacturer Nio stated that despite opposing the decision, it remains committed to the European electric vehicle market.
Additionally, China's BYD and Chery have announced plans to produce cars in Europe to avoid tariffs.
Will Roberts, head of automotive research at Rho Motion, said that although Chinese automakers have room to absorb the tariffs, it will test whether the Chinese government will take reciprocal measures.
He added, "Europe's manufacturers still rely on the Chinese market, so declining profits from the East would only slow their ability to transition effectively."
German automakers are at the greatest risk, with China accounting for nearly 32% of BMW's sales and about 30% of its rivals Volkswagen and Mercedes-Benz in the first quarter of this year.
Volkswagen shares fell 1.2% on Wednesday, one of the biggest declines in the euro zone blue-chip index. BMW fell 0.9% to its lowest level since November and Mercedes-Benz dropped 0.5% to its lowest level since February.
Potential retaliatory tariffs could bring pain to these companies and the German manufacturing economy. German Chancellor Olaf Scholz warned last weekend at an Opel plant that "isolationism and illegal customs barriers…will only make everything more expensive and everyone poorer."
Volkswagen said the "negative impact" of EU tariffs outweighs "the potential benefits to the European, particularly the German automotive industry."
Mercedes-Benz CEO Ola Kallenius stated, "Removing restrictions and expanding fair free trade promote economic growth. So, we should not go in the opposite direction now."
Tariffs will also affect European automakers producing cars in China for European consumers. For example, Renault imports the affordable Dacia Spring electric city cars from China, while its Chinese partner Dongfeng Motor is among the companies facing a 21% tariff.
Tesla imports China-made EVs to Europe, and BMW imports electric Mini and iX3 cars.
The European auto industry also relies on Chinese components, especially for electric vehicles, as China dominates the supply chain.
BMW CEO Oliver Zipse warned last month that a trade war could have dire consequences for the EV transition, as Europe cannot produce cars without Chinese imports.
Zipse said, "There is no Green Deal in Europe without resources from China."
Hungary’s Ministry for National Economy also opposed Europe's "harsh" penalties on Chinese EV manufacturers. Under right-wing Prime Minister Viktor Orban, Hungary has become a significant trade and investment partner with China, while some other EU countries seek to reduce dependence on China.
The ministry said, "Instead of punitive tariffs, the EU should support the European EV industry."
"We disagree with the brutal European punishment of Chinese electric car manufacturers with punitive tariffs," the ministry added. "Protectionism is not the solution."
In recent years, Hungary has invested more than $1 billion to support companies building new battery plants in the country, including Chinese battery giant CATL.
Hungary has also secured China's first automotive plant investment in Europe, announced last year by BYD. The country will also provide funds for job creation, tax cuts and deregulation of targeted regions to attract foreign investment.
