How can China’s electric vehicles enter the European market when EU countervailing tariffs are implemented?

On October 29, the European Commission announced that it had concluded its countervailing investigation into Chinese electric vehicles and decided to impose a countervailing duty of 17% of 35.

3% on pure electric vehicles imported from China for a period of five years.

The final tariff will come into effect on October 30 local time.

Source: European Commission, on October 30, a spokesman for the Chinese Ministry of Commerce said that he did not agree with and did not accept the findings of the EU’s countervailing investigation on electric vehicles in China, and pointed out that there are many unreasonable and irregularities in the EU’s countervailing investigation of electric vehicles in China, which is a protectionist practice of “unfair competition” in the name of “fair competition”.

Proceedings have been filed under the WTO dispute settlement mechanism.

As for the final determination of the European Commission, SAIC also issued a statement on its official account on October 30, saying that it planned to take the necessary legal measures to sue the case to the European Court of Justice to safeguard its legitimate rights and interests.

Touyuan: SAIC, countervailing duties have a far-reaching impact on the development of the electric vehicle industry.

According to the overseas database of the Global Automotive Research Institute, 38% of China’s 1.

203 million new energy vehicles exported in 2023 reached the European market.

The tariff has risen from 10% to 45.3%. It is undoubtedly a great challenge for many Chinese electric car brands, which already regard Europe as an important export market, to expand the market, especially the current business model based on export trade.

The direct impact is as follows: the product cost rises, the price advantage decreases, and the collection of countervailing duties directly increases the sales cost of Chinese electric vehicles in the European market.

The price of models that originally had a price advantage rose sharply after the imposition of tariffs, narrowing the price gap between electric cars and local European brands, and even lost their advantage in some price ranges.

Take BYD ATTO 3 as an example, the starting price in the German market is 37990 euros.

If a temporary tariff of 17% is added, the cost will rise by about 4400 euros, leveling out the price advantage compared with Volkswagen ID.

4, which is close to positioning, to only 1000-2000 euros.

This will lead to a decline in the competitiveness of China’s electric cars in the European market, and sales may decline significantly.

If the terminal sales price is not adjusted, the profits of the enterprise will be seriously squeezed and the value of going out to sea will be greatly reduced.

Short-term sales decline, market share decline, after the European Union announced the imposition of temporary countervailing duty, Chinese electric vehicle sales in the European market has declined.

With the imposition of countervailing duties, some enterprises may be forced to reduce the types and volume of exports to the European market because of cost and market pressure, and may even withdraw from some European markets.

As a result, the share of Chinese electric vehicles in the European market may be further reduced.

For Chinese electric car companies that have not yet gained a foothold in the European market, the countervailing duty ruling makes it more difficult for them to enter the European market.

New entrants need to spend more time and cost to build brand awareness and sales channels, which will become more difficult in a high tariff environment.

Generally speaking, Chinese electric vehicle brands have entered the European market with a positive attitude in recent years, but with the increase of high tariffs, the market, sales and production strategies of enterprises will differentiate rapidly with the difference of enterprise strength.

Some powerful car companies will speed up the construction of local production capacity in Europe, including making full use of the existing capacity in the European market for rapid product introduction and really going deep into the local market.

Some car companies may consider moving their production bases to other countries or regions in order to avoid high tariffs.

At the same time, some car companies may reduce their investment in the European market and open up other overseas markets instead.

However, this adjustment takes a lot of time and money, and may face new market risks.

According to the statistics of the Global Automotive Research Institute, the United States and Turkey have long carried out targeted tariff increases on Chinese electric vehicles to block the entry of Chinese brands.

The levy of EU countervailing duties may also continue to arouse worries about China’s capital and goods in potential third-party markets.

Other countries may also worry that Chinese electric cars will shift to their market as a result of EU tariffs, thus taking corresponding trade protection measures.

This will make Chinese car companies encounter the double impact from the EU market and non-EU market in the short term.

There are two sides to everything.

Europe has been committed to promoting the electric transformation of the automobile industry, and the existence of Chinese electric vehicles in the European market plays a positive role in promoting the industrial transformation in Europe.

But countervailing tariff rulings undoubtedly slow down this transformation process.

The reduction of electric vehicles in China will seriously affect the popularity of electric vehicles and the exchange and application of technological innovation in the European market, which is not conducive to the realization of emission reduction targets and the development of sustainable transportation in Europe.

At the same time, trade protectionism will not make the domestic electric vehicle industry stronger, due to the lack of competitiveness of products, relatively weak industrial chain, high costs and other factors, superimposed weak consumer demand.

European and American companies are re-examining and adjusting their electrification planning and postponing short-term goals.

If electrification is the certainty of the future, avoiding competition is not a wise choice.

We should not give up the expansion of the European new energy vehicle market.

according to the relevant data from the global database of the Global Automotive Research Institute, the distribution of car sales in the global key regions in 2023 is roughly as follows: China is about 21.

1 million, accounting for 26%.

the United States is about 15 million, accounting for 19%.

Europe is about 14 million, accounting for 17%.

the Latin American market, India and Japan are of the same size, each about 4.

5 million.

There are about 3 million vehicles in the ASEAN market, compared with about 1.

6 million in Russia and 1.

1 million in Australia.

According to the data of the Global Automotive Research Institute the development of electric vehicles in the world is extremely uneven.

China leads the world in new energy sales and penetration followed by Europe.

Of the 13.

91 million new energy vehicles sold worldwide in 2023, 8.

97 million were in China, accounting for more than 64 percent, 3.

01 million in Europe, accounting for 21.

6 percent, and 1.

46 million in the United States, accounting for 10.

5 percent.

In the first half of this year, of the 7.

13 million new energy passenger vehicles worldwide, 4.

7 million were sold in China, accounting for 65.9%. 1.45 million in Europe, accounting for 20.3%. and 750000 in the United States.

Accounted for 10.5%. It is obvious that the development speed of new energy vehicles in Europe is second only to China.

Although there is a trend of slowing down, it is still the most important region for Chinese electric vehicle brands to move towards the global market.

Despite the difficulties, the European market is a place that cannot be given up.

Chinese electric vehicle brands, how to deal with the new changes in the European market, long-term development depends on local production and sustainable operation, in the long run, high tariffs can not stop the development of electric vehicles in China.

After years of development, China’s electric vehicle industry has formed a strong technical strength and supply chain advantages.

Faced with the challenge of high tariffs, Chinese car companies will pay more attention to technological innovation and product quality improvement.

For example, Geely holding Group has always supported free trade, advocated fair competition, strictly abided by the laws and regulations of various countries in the world, and provided excellent products and services to users around the world.

At the same time, Chinese auto companies will actively explore new overseas markets and look for new growth points.

Under the background of global green development and dealing with climate change, electric vehicles are the correct development direction of private passenger cars, and the competitive advantages of Chinese electric vehicles will be further reflected on a global scale.

For Chinese electric vehicle enterprises, they should actively deal with the challenges and seek breakthroughs.

First of all, Chinese car companies should speed up the pace of internationalization and achieve local production and sales by setting up factories overseas and setting up joint ventures, so as to avoid trade barriers.

At present, BYD, Geely, SAIC, Chery, Changan Automobile, Xiaopeng Automobile, Zero Motor and other car companies have planned to avoid the impact of countervailing duties through localization means such as building factories in Europe, setting up joint ventures and making use of the production capacity of existing partners.

Enterprises should attach importance to the diversification and regionalization of the industrial chain and reduce their dependence on the EU market.

For example, cooperation with other countries and regions can be strengthened to open up emerging markets.

Data show that in recent years, Chinese electric vehicle companies have gradually increased their market share in South America, Africa, the Middle East and other places, and the demand for electric vehicles in these regions is also on the rise.

By expanding these markets, Chinese electric car companies can reduce the risk of dependence on the EU market and improve their stability and resilience in the global automobile industry chain.

Enterprises should strengthen technological innovation and improve product quality and competitiveness.

Under the background of global green development and dealing with climate change, electric car is the correct development direction of private passenger car.

Chinese electric vehicle enterprises should increase investment in technology research and development, improve key technical indicators such as battery mileage and charging speed, and provide more high-quality products and services for global users.

Enterprises should also strengthen their voice in multilateral trade mechanisms such as the World Trade Organization and make representations through legal channels.

Enterprises should actively participate in the relevant EU investigation procedures, fully express their views and positions, and strive to reduce tariff rates or overturn countervailing rulings.

If the appeal and defense within the EU cannot achieve satisfactory results, Chinese electric vehicle companies can file a lawsuit with the World Trade Organization (WTO) and use WTO’s dispute settlement mechanism to protect their legitimate rights and interests.

WTO has relatively perfect rules and procedures and can adjudicate trade disputes fairly.

Chinese enterprises should make full use of this platform to strive for a fair trade environment.

The road is long and the road is coming.

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