VDA says China EV tariffs a step in the wrong direction

The European Commission (EC), which oversees the EU’s trade policy, said in June it would impose additional tariffs of up to 38% on Chinese EVs following preliminary results of its anti-subsidy investigation. The EC said the investigation found that prices are being distorted by Chinese state support.

The EC started to apply additional tariffs to different Chinese EV makers over the summer, including BYD, Geely and SAIC, but the vote last week means tariffs will rise from 10% of an EV’s value to more than 45% for the next five years.

The EU is the largest market for China’s electric vehicle exports and the tariffs are expected to raise the sales price of the BEVs for the end consumer.

Germany, the largest EU economy, voted against the tariffs. That was interpreted as the right position, according to the German Association of the Automotive Industry (VDA). 

“We need global trade,” said the VDA in a statement. “European prosperity is based to a large extent on international exchange and global demand for our products. This has been one of Europe’s strengths for decades.” 

Last year, Germany exported more than 216,000 vehicles to China, down -15% on the previous year, according to figures from the VDA. German exports to wider Asia topped 574,000 last year (-8%).

The VDA said the vote to approve the EU Commission’s plan for additional tariffs from the end of October, is a further step away from global cooperation.

“The investigation has undoubtedly shown that there is a need for negotiations with China,” said the association. “These negotiations must now continue to prevent escalation, ideally avert the tariffs so that we do not risk a trade conflict.”

Earlier this year Volkswagen Group, which could find itself affected by the tariffs, said the timing of the EU Commission’s decision was “detrimental to the current weak demand for BEV vehicles in Germany and Europe”.

VW Group’s largest joint venture in China is with SAIC, known as SAIC-VW based in Shanghai. A spokesperson for VW Group said the company stood for an open and rules-based trade policy with free and fair trade, and open markets, but said that countervailing duties are “generally not suitable” for strengthening the competitiveness of the European automotive sector in the long term.

BYD imports 
Chinese battery EV (BEV) makers have continued to target Europe for exports, despite the threat of additional tariffs. As reported earlier this year Europe’s top performing vehicle-handling ports have reported the rise in Chinese vehicle imports, which has continued from 2023. China’s biggest BEV maker is not leaving the passage of its products to chance either and in February this year its first own car freighter, the Explorer No. 1, made its maiden voyage to Bremerhaven port in Germany. The car carrier was loaded with 3,000 BEVs and had previously docked in Vlissingen in the Netherlands.

BYD wants to significantly boost sales in Europe to account for up to 10% of all EV sales there by 2030, equal to around 800,000 vehicles a year, according to earlier comments by its European CEO, Michael Shu.

BEVs accounted for 23.2% of total vehicle exports in the first quarter of 2024, according to figures from China Association of Automobile Manufacturers (Caam), with 307,000 units exported in the quarter. However, the Caam data shows that BEV exports strengthened in March, increasing to 124,000 units up from just 82,000 exported in February.