Gamingdeputy reported on April 30 that according to a latest analysis report by Rhodium Group, the EU may need to impose tariffs of up to 55% on Chinese electric vehicles to effectively curb the import of Chinese electric vehicles. The report, released on Monday, comes as the European Union launches a countervailing investigation into Chinese electric vehicle imports.
Rhodium Consulting had previously expected that the EU would impose tariffs of 15% to 30% on Chinese electric vehicles, but the report pointed out that this tax rate level may not be enough to offset competition from China. “Even if tariffs reach the expected upper limit,” the report said,Some Chinese carmakers can still make substantial profit margins from exporting cars to Europe because they have a huge cost advantage. “
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The report cited as an example that BYD surpassed Tesla last year to become the world's largest electric vehicle manufacturer. Despite having to pay a 10% tariff, BYD's profit margins in China are much lower than those in Europe. Taking the BYD Seal U series model as an example, its price in China is about 20,500 euros, while its price in the EU is as high as 42,000 euros. Rhodium Consulting estimates that BYD's domestic profit on this model is about 1,300 euros, while in Europe it is as high as 14,300 euros.Even with the 30% tariff, BYD’s profits in the EU are still higher.
The report believes that BYD may further reduce selling prices in order to achieve its goal of growing market share in the EU. The 30% tariff level still leaves enough room for price reductions. The report said, “For a very competitive manufacturer like BYD, tariffs as high as 45% or even 55% will really make it more competitive in the European market. Awful.”
The European Commission, the EU's executive agency, last year launched an investigation into Chinese electric vehicles and their subsidies. EU officials say an influx of cheap electric cars could threaten Europe's domestic automakers.
Chinese electric car makers already face challenges due to high U.S. tariffs and political resistance. Therefore, for Chinese companies like BYD seeking global expansion, the European market becomes even more important.
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Gamingdeputy noted that according to an analysis by the European Federation of Transport and Environment, electric vehicles from Chinese companies are expected to occupy 11% of the EU market in 2024, and may reach 20% in 2027. If cars manufactured in China by non-Chinese companies are also included, the figure is expected to exceed 25% this year.
Rhodium Consulting believes that,Electric vehicle imports from non-Chinese companies may also be affected by EU subsidy investigationtariff levels of 15% to 30% could choke off the business of foreign companies such as BMW or Tesla that ship cars from China to sell in Europe.
In response to policy risks, electric car manufacturers are trying to move production to Europe, and BYD plans to build a factory in Hungary.
However, Rhodium Group added that the EU could also take other measures to protect Europe's electric vehicle industry, such as restricting Chinese imports on national security grounds or increasing consumer subsidies for EU-made electric vehicles.
The Chinese government has criticized the EU subsidy investigation as “naked protectionism” and that Chinese companies are simply more competitive than their Western counterparts.