WionDrive News Desk 
The European electric vehicle (EV) market is bracing for a significant shift as the European Commission prepares to impose provisional tariffs of up to 37.6% on EVs manufactured in China. This move, aimed at preventing a flood of subsidised Chinese-built EVs into the European market, is set to be confirmed on Thursday despite last-minute negotiations between Beijing and Brussels.
The proposed tariffs have sparked intense debate within the EU, with member countries divided over whether to support the additional levies. The decision requires a “qualified majority” of at least 15 countries representing 65% of the EU population to avoid being blocked, highlighting the complex political landscape surrounding this issue.
Chinese automakers, who have rapidly gained market share in Europe’s EV sector, are now facing a challenging road ahead. In 2023, Chinese brands captured 19% of Europe’s EV market, up from 16% in 2022, according to Rhodium Group. This growth has been largely attributed to their 30% or more cost advantage over European competitors.
Among the Chinese manufacturers, BYD, the world’s largest EV maker, faces the lowest proposed tariff increase of 17.4% on top of the existing 10% tariff. In contrast, SAIC’s MG Motors, currently the most popular Chinese-branded EV in Europe, could be hit with the highest tariff hike.
Industry experts predict varied impacts on different Chinese manufacturers. Lei Xing, founder of consultancy AutoXing, suggests that while BYD might be able to absorb the additional costs, it represents a “major bump” for companies like SAIC Motor. The tariffs are expected to slow down Chinese EV makers’ European expansion plans, though not halt them entirely.
In response to these potential tariffs, some Chinese automakers are already adapting their strategies. Chery Auto, China’s largest automaker by export volume, has signed a joint venture with Spain’s EV Motors to establish its first European manufacturing site in Catalonia. Similarly, BYD is constructing its first European EV production base in Hungary.
However, setting up production in Europe may not be a viable option for all Chinese EV makers. The decision to localise production depends on various factors, including sales volumes and the efficiency of existing supply chains in China. For some, the most straightforward response might be to increase the European sticker price for their EVs, a move that could impact their competitiveness and sales volumes.
Bill Russo, founder and CEO of consultancy Automobility Ltd, believes that the tariffs could incentivise Chinese companies to reconsider their export-based business models and push some of their production capacity closer to or within European markets. This shift could potentially reshape the European EV manufacturing landscape in the coming years.
The situation remains fluid, with both Europe and China having reasons to push for a deal to avoid adding billions of dollars in new costs for Chinese EV makers. Beijing rejects accusations that Chinese EVs are unfairly subsidised and has threatened wide-ranging retaliation if the tariffs are imposed.
