Opinion | China’s carmakers still in the fast lane
Weeks after the United States imposed a 100 per cent tariff on Chinese electric vehicle (EV) imports, the European Union has weighed in with the results of its seven-month probe into state subsidies in the sector. For China’s EV makers who had been waiting for the other shoe to drop, it could have been worse.
While the new EU tariffs range up to 38.1 per cent, some carmakers who were more compliant with the probe got off relatively lightly. Giant BYD Electric, which rivals Tesla as the world’s top EV maker, saw a levy of 17.4 per cent, and Geely Automobile Holdings, the largest exporter, got 20 per cent. SAIC, which the EU said didn’t take part in the investigation, got the maximum. The new tariff will be added to an existing 10 per cent import tariff from July 4.
The result was a collective sigh of relief at the end of a probe that had been hanging over the market for months. Shares in Hong Kong listed Chinese EV makers, including BYD, Geely and Li Auto shot up after the market deemed the tariffs to be relatively mild and not steep enough to prevent them from competing in Europe.
China has rejected the European and American accusations of “overcapacity” and dumping, and of providing excessive subsidies to its EV makers. Beijing is yet to announce a retaliatory response.
Ironically, as tariffs are aimed at all exporters from China, European manufacturers with ventures in the country are also caught up in the net. SAIC has a venture with Volkswagen and Audi as well as General Motors, an American firm. The result is BYD and Geely are even more price competitive against their peers.
China’s EV makers have improved immensely in quality of design, capability and intelligence, and through efficient production they make more vehicles at lower prices. Carmakers in Europe and the United States have fallen behind while the Chinese stole a march.
In the end, the European consumer will bear the costs of the tariffs, forced to choose from a limited variety of pricier and lower-quality domestic models until their industries catch up. With BYD planning a plant in Hungary, Chery in Spain and Dongfeng Motor eyeing Italy, Europe’s carmakers have their work cut out for them.
