The EU will impose up to 38% duties on Chinese electric cars

Beijing EVs could conquer 20% of the EU car market already in 2027

Brussels is ready to put Duties on Chinese electric cars receiving illegal subsidies to curb unfair competition in Beijing. From 4 July, additional temporary taxes of up to 38.1% could be imposed on BEV imported into Europe, in addition to the 10% already in force.

All set for duties on Chinese electric cars

The decision comes at a time when the EU Commission’s investigation into subsidies to Chinese electric vehicles launched last October is still ongoing. Officials in Brussels will be seeking an agreement with the Chinese government in the coming weeks. In case of black smoke, temporary duties will be levied. They can then be confirmed or remodulated at the end of the investigation, that is by November 2024.

“This is based on clear evidence of our thorough investigation and in full compliance with WTO rules. We will now work with the Chinese authorities and all stakeholders to finalise this investigation,” said Valdis Dombrovskis, vice-president of the Trade Delegation Commission.

“Our goal is to restore a level playing field and ensure that the European market remains open to Chinese electric vehicle manufacturers, provided that they respect the globally agreed trade rules,” he added.

Temporary duties on Chinese electric cars up to 38.1%

The amount of the tax is calculated based on the degree of cooperation that the individual brands have demonstrated with the European authorities. For BYD the temporary duty provided for is 17.4%, for Geely 20% and for SAIC 38.1%. Other car manufacturers that have cooperated with Brussels will be subject to duties of 21%, while for those who did not support the investigation will trigger the highest rate, to 38.1%.

“As part of the ongoing investigation, the Commission provisionally concluded that the value chain of battery electric vehicles (BEV) in China benefits from unfair subsidies, which are causing a threat of economic damage to EU producers of BEV. The investigation also examined the likely consequences and impact of the measures on importers, users and consumers of BEV in the EU”, the EU Commission points out in a note.

Chinese EVs are already 7.9% of the EU car market

Already in March, the Community Executive announced that it had sufficient information to consider that Chinese EV imports “are subsidised“. Aid consists in the direct transfer of funds and potential direct transfers of funds or bonds, but also in the renunciation by the government of revenue otherwise due or in the non-enforcement of revenue. Or, again, in the provision, by the public administration, of goods or services for less than adequate consideration.

For this reason, Brussels had begun collecting customs data on EV imports from Beijing, essential to proceed with duties on Chinese electric cars. The fear is that unfair competition from China will result in dumping and distort the European market, putting the old continent’s brands out of the picture.

Beijing’s low-cost EVs (or produced by European brands in China) quickly made their way into Europe, rising from 57,000 units sold in 2020 to 437,000 in 2023, resulting in an increase in transaction volume from 631 million to 9.66 billion euros. This allowed China to gain increasing market shares, from 0.4% in 2019 to 7.9% last year. According to an analysis by Transport & Environment, if unchanged, this trend would bring the share of Chinese EVs in Europe to over 20% already in 2027.