On October 7, 2024, the European Union member states voted to implement significant tariffs on battery electric vehicles produced in China. This decisive action is part of a broader strategy by the EU to address concerns regarding market distortions attributed to Chinese EVs, which are perceived to be benefitting from unfair subsidies that allow them to be sold at artificially low prices.
The European Commission confirmed the vote, stating that the necessary support from EU member states was achieved to adopt the proposed countervailing duties. In an official statement, the Commission emphasized its commitment to continue negotiations with Chinese authorities. “In parallel, the EU and China continue to work hard to explore an alternative solution that would have to be fully WTO-compatible, adequate in addressing the injurious subsidization established by the commission’s investigation, monitorable, and enforceable,” the statement read.
This move follows an anti-subsidy investigation launched by the EC last year, which aimed to assess the impact of low-priced Chinese BEVs on the European market. The Commission's investigation found that these vehicles were distorting competition, leading to the introduction of provisional duties in July 2024. With the new tariffs set to reach up to 35.3%, this adds to the existing 10% import duty on vehicles entering the EU.
The decision to impose tariffs has elicited mixed reactions across Europe. While countries such as France, Greece, Italy, and Poland reportedly supported the tariffs, opposition came from other quarters. The German labor union IG Metall, along with works councils from major automotive companies, urged Germany to reject the tariff proposal, labeling it “the wrong approach.” They argued that such measures could exacerbate tensions between the EU and China and ultimately harm European consumers.
Data from the campaign group Transport & Environment highlighted the mixed impact of previous EU tariffs on Chinese EVs. According to their analysis, the British car manufacturer MG experienced its largest-ever decline in BEV market share in Europe, plummeting from 4.1% in August 2023 to 2.4% in August 2024. Conversely, Chinese manufacturer BYD saw its market share grow, albeit at a slower pace, rising from 1.6% in August 2023 to 2.9% in August 2024. Geely also increased its presence in the market, moving from 1.3% to 2% during the same period.
The EU’s decision to impose tariffs reflects a strategic pivot in its trade policy, aiming to protect domestic automotive manufacturers from what they perceive as unfair competition from subsidized Chinese vehicles. This policy is set against a backdrop of escalating global trade tensions, particularly in the technology and automotive sectors.
As the situation develops, all eyes will be on how Beijing responds to these tariffs. Historically, China has been known to retaliate against trade barriers, which could lead to a further escalation of tensions between the EU and one of its largest trading partners.
The outcome of this decision will not only impact the EV market dynamics in Europe but also set the tone for future trade relations between the EU and China, particularly in the context of emerging green technologies. Stakeholders in the automotive industry will need to closely monitor the developments and adjust their strategies accordingly in a rapidly changing market environment.
