Europe to impose tariff hike of up to 38 per cent on Chinese EVs

The European Commission has announced it will impose additional import tariffs of up to 38.1 per cent on Chinese electric cars from July, following an investigation that found excessive subsidies were allowing those EVs to undercut their European rivals.

China has dubbed the new tariffs as protectionist, while Chinese car-makers themselves dismissed them as measures that will have no major impact.

The move in Europe comes after similar measures were taken in the US, where duties for Chinese EVs were quadrupled to 100 per cent.

The European Commission said it would set additional tariffs of 17.4 per cent for BYD, 20 per cent for Geely and 38.1 per cent for SAIC.

Those figures are on top of the existing 10 per cent levied on Chinese brands.

Said to equate to billions of extra dollars slapped onto Chinese car-makers, European legislators hope the tariffs will curb the influx of lower-cost EVs coming in from China at a time when demand for electric cars is falling within the region.

As well as impacting Chinese car-makers, European brands like BMW will also be hit, incurring extra duties on cars made in China but sold in Europe.

There are no similar moves planned for Australia, where there is no longer a local manufacturing industry to protect.

However, action taken by major markets such as the US and Europe could prompt the fast-growing Chinese brands to scale up their efforts here even further, so federal authorities are studying the issue.

Chinese foreign ministry spokesperson Lin Jian said the new tariffs in Europe would harm China-EU economic and trade co-operation and the stability of global automotive production because of its impact on the supply chain.

“This anti-subsidy investigation is a typical case of protectionism,” he said, adding that Beijing would take all necessary measures to firmly safeguard its legitimate rights and interests.

Despite the fiery government response, the Chinese Passenger Car Association (CPCA) said it was less worried by the new tariffs.

“The EU’s provisional tariffs come basically within our expectations, averaging around 20 per cent, which won’t have much of an impact on the majority of Chinese firms,” said CPCA secretary general Cui Dongshu.

“Those exporting China-made EVs that include Tesla, Geely and BYD still have huge potential for development in Europe in the future.”

The tariffs will be rolled out from July 4, although the European Commission’s anti-subsidy investigation will continue through to November 2, when the duties will be set in stone for up to five years.

If you’re wondering why the rates are different, the 21 per cent tariff applies to companies who co-operated with the investigation while the maximum 38.1 per cent tariff is for those who did not assist investigators.

Both BMW and Tesla were both labelled as co-operative.

The European Commission was originally expected to introduce much lower tariffs of 10-25 per cent.

It’s not known what triggered the more punitive measures, but recent reports suggested the subsidies were now so great that any tariff would need to be above 50 per cent before they begin to make an impact.

Adding credibility to that theory, the BYD Seal U mid-size SUV (known in Australia as the BYD Sealion 6) currently sells for €21,769 ($A35,500) in China, while an identical vehicle in Germany apparently costs €41,990 ($A68,300).

Even cheaper models like the BYD Atto 3 small EV sells for the equivalent of €17,923 ($A29,200) in China, compared to €37,990 ($A61,800) in Germany.

More than 300,000 Chinese-built EVs were sold in Europe in 2023 – including many from European brands. Chinese brands alone claimed a 19 per cent market share.

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