The European Union confirmed on Thursday its decision to raise tariffs on electric vehicles imported from China – with one carmaker issuing fresh warnings that it may have to raise prices as a result.
The European Commission, the European Union’s executive arm, announced plans for such taxes in June after an investigation concluded that EV battery manufacturers in China benefit from “unfair” subsidies.
On Thursday, European regulators confirmed that these duties, which have been slightly modified from 17.4% to 37.6%, will come into force on Friday. The taxes will affect automakers from Chinese giant BYD to, potentially, European brands that make cars in China, and even the American giant. Teslawhich has a factory in Shanghai.
The EU’s decision comes at a time when Chinese automakers have been aggressively expanding into Europe with competitively priced offerings, posing a threat to the region’s top automakers, many of which have lagged behind in EVs. The European Commission says these car manufacturers have benefited from “unfair subsidy”.
Automakers have already reacted to the tariffs.
On Thursday, the Chinese EV maker Neo said it is currently maintaining prices for its cars sold in Europe, but added that “it cannot be ruled out that prices may be adjusted at a later stage as a result of the imposition of these tariffs.”
A spokesperson for another Chinese EV company, Xpeng said on Thursday that customers awaiting car deliveries, or those placing new orders before the tariffs take effect, will be “protected from any price increases”.
He did not comment on whether he would end up raising prices as a result of the tax.
Geely declined to comment when contacted by CNBC.
When the EU first announced the tariffs last month, Tesla said it would likely raise European prices of its Model 3. The EU has not yet said what specific level of tariffs Tesla will face, but noted last month that the US automaker “may receive an individually calculated fee.”
China-EU negotiations
The tariffs, which take effect on Friday, are provisional and last for four months. At that time, EU member states must vote on the so-called “final duties”, which will last five years.
Chinese and EU officials have held several rounds of meetings to discuss the tariffs, with Beijing in June criticizing the EU’s imposition of tariffs as a “protectionist act”.
Chinese Commerce Ministry spokesman He Yadong said Thursday that he hopes the two sides “meet each other halfway, show sincerity, speed up the consultation process and, based on rules and reality, reach a mutually acceptable solution as soon as possible.”
Chinese EV manufacturer committed to Europe
Chinese electric vehicle manufacturers reiterated their commitment to the European market, where they have expanded in recent years.
Xpeng said it is “committed to providing innovative, high-quality products to its ever-growing European customer base and making long-term commitments in these markets.”
The company added that it is “actively evaluating the feasibility of establishing local manufacturing capabilities in Europe.” Xpeng currently manufactures all of its cars in China. A European factory can help offset some of the fees.
BYD – one of the largest electric vehicle makers in China and globally – said last year that it plans to open its first European factory in Hungary, without specifying a timeline.
Meanwhile, Nio said on Thursday that it “is fully committed to the European market: we believe in promoting competition and consumer interest and hope to reach a solution with the EU before the final measures are implemented in November 2024”.
