On October 4th, the EU voted to impose tariffs on Chinese electric cars, with 10 EU member states voting for it, 5 EU member states voting against it, and 12 other countries abstaining.
This means that the EU is in favor of imposing tariffs on Chinese electric vehicles, and the new tariff policy (import tariffs up to 45%) will be formally implemented for a period of five years from next month.
Source: EU, rising from 10% to 45%.
Once implemented, such a tariff adjustment will be an important obstacle to the follow-up development for many Chinese electric car brands that already regard Europe as a major export market.
at the very least, it is a major challenge to the current export-oriented business model.
The development at the enterprise level has been hindered, and the national level has made a clear statement on this kind of unfair bill with the nature of regional protection a long time ago: “the Chinese side firmly opposes the unfair, uncompliant and unreasonable protectionist practices of the European side in this case.
We firmly oppose the European side imposing countervailing duties on Chinese electric vehicles.
” Counter-measures are already on the way? After the European Union voted to impose tariffs on Chinese-made electric cars, the Ministry of Commerce issued a notice on October 8 on the implementation of temporary anti-dumping measures on import-related brandy originating in the European Union.
it is preliminarily determined that import-related brandy originating from the European Union is dumped, and it is decided to implement temporary anti-dumping measures in the form of margin from October 11.
The margin ratio of each company is 30.
6% to 39%.
Source: Ministry of Commerce, in response to relevant questions, a spokesman for the Ministry of Commerce said that China’s anti-dumping measures against imported brandy originating from the European Union are legitimate trade relief measures initiated and taken in response to the application of domestic industries, and are in full compliance with WTO rules.
It is reported that France is a major exporter of Chinese brandy.
Last year, French brandy exports to China reached 1.
7 billion US dollars, accounting for 99 percent of China’s imports of brandy.
On the contrary, the countervailing investigation and tariff restrictions conducted by the European Union on Chinese electric vehicles are not in response to the application of the industry.
in fact, many member states and related enterprises within the European Union are opposed to the new tariff bill.
Germany is a big country in the automobile industry around the world.
Mercedes-Benz, BMW and Audi, the “top three luxury cars” in the traditional sense, are all German brands.
Volkswagen is also a leader in the global auto market, with Volkswagen Group selling a total of 9.
23 million vehicles in 2023, ranking second only to Toyota among global automakers.
Germany voted against imposing tariffs on Chinese electric cars.
German carmakers have warned that once the new tariff policy takes effect, it could hinder German investment projects in China and affect German car exports.
What German car companies really need is a mutually beneficial trade order with the Chinese market, not unilateral trade protection.
The EU-China Chamber of Commerce, the Federation of German Industry and other organizations are also actively calling for the continuation of negotiations to prevent the escalation of trade conflicts.
But the EU’s new rules are obviously protecting trade in the name of trade relief.
One of the most direct consequences of unfair unilateral trade protection policies is reciprocal countermeasures.
As a big automobile country within the European Union, Germany actively opposes the imposition of tariffs on Chinese electric vehicles because it is worried that it will lead to a countermeasure of tariffs.
According to trade data compiled by Galaxy, nearly 1/3 of the total sales of German car companies in 2023 were contributed by the Chinese market.
If this part of the business is significantly affected, it will undoubtedly be painful damage to Germany’s absolute pillar industry, the automobile manufacturing industry.
At present, the Ministry of Commerce is studying measures such as raising tariffs on imported high-engine fuel vehicles, and it has been reported that China’s counter-tariffs may apply to cars with engine engines of 2.
5 liters or more.
Such products exported to the Chinese market account for about 1 per cent of Volkswagen’s total sales, 2 per cent for BMW and 4 per cent for Mercedes, according to Stifel Research.
Of course, Porsche is the most affected, accounting for as much as 17%.
Given that most of the high-engine cars exported to China are high-end models with sizeable profit margins, Stifel Research has judged that once these products are restricted, it will have a negative impact on German carmakers’ operating profits by 4 to 10 per cent.
According to estimates by the Federation of passengers, the total value of Europe’s annual exports of passenger cars with engines of more than 2.
5 liters to China has reached US $18 billion, which is higher than that of China’s exports to Europe in 2023.
If China raises temporary tariff rates, European car exports to China will be hit.
In addition to automotive products, agricultural products are also commodities that have a great impact on the economy of the European Union.
at present, in addition to implementing temporary anti-dumping measures on imports of brandy originating from the European Union in accordance with the law, China is also launching anti-dumping and countervailing investigations on relevant pork, pig by-products and dairy products imported from the European Union, and will make an objective and impartial ruling according to the results of the investigation to firmly safeguard the legitimate rights and interests of Chinese industries and enterprises.
Chinese car companies, how to deal with the new changes in the European market, EU member states voted and passed a proposal to impose tariffs on Chinese electric vehicles, but in fact, it does not mean that the proposal will be 100% implemented.
The European Commission will make a final decision before November 4, during which there is room for further communication and negotiations between China and the EU.
Moreover, the new taxation plan complements the provisions for continuing to negotiate tariffs with China after the final adjudication.
The door for tariff adjustment in the future has not been completely closed, and the two sides can have more in-depth discussions on such issues as tariff policy, market access and technical standards, in order to reach a consensus.
Of course, based on the current international political and economic environment, the general view in the industry is that the possibility of substantial adjustment in the final adjudication of the European Union is not high.
The reason is simple: the purpose of the EU’s move is to protect the local auto industry in the first place.
In the current market competition in the stock market with relatively limited resources, it is an important demand of the European Union to maintain the technological leading position of the European automobile industry and enhance the profitability of European car companies.
especially in the emerging high-tech and high-profit field of the smart electric vehicle market, the EU certainly has the vision to continue to maintain global leadership.
In addition, it is also to balance China-EU trade relations (such as reducing the trade deficit) and to be affected by geopolitical confrontations, which are difficult to solve in a short period of time.
Talk about the results.
Some industry experts further pointed out that our current countermeasures mainly affect agriculture in Europe, while the EU’s new tariff policy protects the local automobile industry.
Although agriculture is an important industry in many EU member states, the affected countries and enterprises may put pressure on the EU to abolish or adjust tariff measures, but in the final analysis, the automobile industry is the local foundation.
Therefore, on the whole, the current counter-measures should not change the EU’s insistence on imposing tariffs.
So how big is the impact of the EU tariff? Some industry experts also pointed out that in the long run, the automobile industry is stepping into the Chinese era, Chinese enterprises have formed a strong cost-effective advantage and a sound supply chain in the field of electric vehicles, and the overall development trend of China’s automobile industry, will not be fundamentally changed because of the so-called trade protectionism.
Of course, if the tariff plan is formally implemented, the adverse impact will also be obvious to many Chinese car companies that are already at full power to expand the EU market in the short term.
Higher tariffs will deprive Chinese electric cars of price advantage in the EU market, forcing them to compete with European brands with local resources in the same price range (or even higher prices).
This will affect not only the sales of existing models, but also the future market promotion of more new models, and the European strategies of many Chinese car companies may be forced to delay.
The impact on market performance is already evident.
In August, the number of electric vehicles registered by Chinese automakers in Europe fell 48% from a year earlier, the lowest level in the past 18 months, according to Bloomberg.
At present, Mingjue is the best-selling Chinese car brand in Europe, with a total of 159387 cars registered in Europe in the first eight months of this year.
Mingjue is also the Chinese car company that will be subject to the highest tariffs this time, but most of its sales in Europe are still fuel, hybrid or plug-in hybrid models.
these models are not affected by the rise in EU tariffs on electric cars in China.
In addition, Mingjue’s French branch has previously said that the new additional tariffs will not affect the price of electric cars sold in France in 2024.
Of course, Mingjue France also said that EU tariffs on electric cars imported from China were “too high” and would hinder the green transformation of the European car industry.
Photo Source: SAIC Mingjue, for those Chinese car companies that are more affected, how to deal with it in the future? It is certain that adaptive adjustments will be made in the short term.
Gaishi Automotive Research Institute believes that in the short term, there will be a relatively significant impact on the total export volume of China’s new energy vehicles, and some car companies will also raise model prices to cope with tariff costs.
In addition, Chinese car companies also need to carry out a more diversified market layout, formulate export plans for more countries and regions, and disperse the possible regional business risks.
In the medium to long term, the development model of Chinese car companies and parts entering the EU market should be adjusted from the current trade model to the local investment and construction mode (Volvo has planned to start producing EX30 in Ghent, Belgium in the first half of 2025 to evade EU tariffs).
Gaishi Automotive Research Institute pointed out that in order to cope with the adjustment and changes of tariff policy, a variety of new development models will appear in the European strategy of Chinese car companies in the future.
For example, more domestic enterprises will acquire and merge multinational parts and components enterprises, and make full use of their customer resources, channel resources, production capacity resources and product technology to enter the European market together to avoid tariff barriers.
in addition, Gai Shi Automotive Research Institute also predicts that in the EU market, more and more joint ventures and cooperation between Chinese and European car companies will enter the local market through reverse technology export.
Of course, more fierce competition does not bring all bad news.
Competition is the driving force for the progress of the industry, and more full competition can also promote the development of China’s new energy vehicle industry at a faster speed.
Competition can not only improve the efficiency of comprehensive utilization of resources, but also promote technological innovation and the improvement of enterprise management ability.
In the face of greater competitive pressure, Chinese car companies, which aim to compete in the global market, are bound to further enhance their technological research and development and cost control capabilities, and improve the core competitiveness of their products, especially in the tram field, while enhancing the brand strength at the same time, the provision of better products and services is certainly a prerequisite to meet all challenges in the long run.
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