Yahoo Finance British car brands caught up in EU crackdown on electric vehicles
British car brands including MG and Lotus have been caught up in a European Union crackdown on Chinese electric vehicles.
Brussels has announced tariffs of up to 48pc on EVs made in China, included those manufactured by MG, Volvo and BYD, in a row over what the EU claims are unfair subsidies from Beijing.
The measures offer protection for European carmakers, who have complained they are being undercut unfairly.
However, the tariffs threaten to push up the price of EVs for drivers in the bloc.
It also risks a diplomatic spat with China.
Beijing has reacted angrily to the threat of a proposed European crackdown and warned it will impose its own tariffs on European goods in retaliation.
Imported EVs already face tariffs of 10pc in the EU but the European Commission said on Wednesday it was prepared to impose extra duties on the biggest Chinese manufacturers of between 17pc and 38pc.
Brands facing higher tariffs include BYD, as well as British and European brands that are owned by Chinese parent companies. These include MG, Lotus and Volvo.
Following the investigation, the commission proposed an extra duty of 17.4pc on cars made by BYD, 20pc on those made by Volvo-owner Geely and 38pc for those of MG-owner SAIC.
Other Chinese carmakers face extra duties of 21pc or 38pc, depending on whether they cooperated or refused to cooperate with the EU’s inquiry.
The commission said Tesla, which makes electric cars in China and exports them to Europe, may get its own individual rate.
The provisional measures were introduced following an eight-month investigation that found electric carmakers in China “benefit from unfair subsidies”.
The investigation found “the entire BEV [battery electric vehicle] value chain is heavily subsidised in China, and that imports of Chinese BEVs presented a threat of clearly foreseeable and imminent injury to EU industry”.
In its announcement, the European Commission said it would now discuss the issue with Chinese authorities to “explore possible ways to resolve the issues identified”.
But it added: “Should discussions with Chinese authorities not lead to an effective solution, these provisional countervailing duties would be introduced from July 4.”
The tariffs could also potentially be imposed retrospectively, back to a date of April 5, although that has not been decided yet.
On Wednesday, a spokesman for the Chinese foreign ministry branded the commission’s decision “a typical case of protectionism” and warned it would damage trade ties. The spokesman added that Beijing would do what was necessary to “firmly safeguard” its interests.
The EU’s measures fall short of the 100pc tariffs imposed by the Biden administration in the US and are narrowly below the 50pc level that analysts at Rhodium Group said would be necessary to make the Continent “unattractive” for Chinese brands.
Chinese EV makers have been flooding Europe with their vehicles over the last year amid brutal price wars at home.
It has triggered fears that the European automotive industry faces an existential threat from a wave of low-cost Chinese EVs, although EU member states have been split on how to respond.
France and Spain have been pushing for a tougher approach, while Germany and its carmakers have opposed the idea.
Will Roberts, head of automotive research at Rho Motion, said carmakers were wary of retaliation from China, which could hurt sales.
He said: “The true test from today’s announcement will be whether Beijing will retaliate in kind, or come to an amicable solution.
“Europe’s manufacturers still rely on the Chinese market, so declining profits from the East would only slow their ability to transition effectively.”
The European Commission insisted its aim was not to shut Chinese EVs out of the domestic market but to level the playing field between Europe and China’s respective automotive industries.
Some of the carmakers caught up in the crackdown have already put in motion plans to manufacture more EVs in Europe to avoid the threat of tariffs.
BYD is building a car factory in Hungary, while Volvo is shifting EV production from China to Belgium and SAIC – which relocated production of MG cars to China in 2016 – is also hunting for a European manufacturing site.
However, there are concerns that hindering the introduction of cheaper cars will slow the adoption of EVs, which has so far been hampered by high prices.
Addressing concerns that the move would hurt the push towards net zero, the European Commission said on Wednesday: “The EU’s green transition cannot be based on unfair imports at the expense of EU industry.”
The EU launched its investigation last October amid concerns that Beijing had artificially tipped the scales in the favour of Chinese brands by pumping tens of billions of dollars worth of subsidies into its own industry, alongside loans, land deals and tax breaks.
The UK has been silent on whether it will impose tariffs of its own, with ministers previously saying they would wait for the findings of the EU investigation.
