The European Union (EU) has announced significant import taxes on electric vehicles (EVs) manufactured in China, a decision backed by a majority of member states in a move aimed at safeguarding Europe’s car industry.
Tariffs on Chinese EVs are set to rise from the current 10% to as high as 45% over the next five years, following concerns that Chinese automakers are benefiting from unfair state subsidies.
The new tariffs, designed to level the playing field for European manufacturers, come after an EU investigation found that Chinese EV makers received substantial state aid, allowing them to offer lower prices that European companies struggle to compete with. Brands like SAIC, BYD, and Geely are among those targeted by the new duties, with the charges tailored to reflect the estimated level of subsidies they receive.
The decision, which could trigger a trade war between the EU and China, divided member states. France, Italy, the Netherlands, and Poland supported the measures, citing the need to protect Europe’s domestic car industry. Meanwhile, Germany, whose economy heavily relies on exports to China, opposed the tariffs, with major carmakers like Volkswagen warning that such moves could backfire. Volkswagen described the tariffs as “the wrong approach,” highlighting the potential negative impact on trade relations.
The vote, which took place last Friday, saw many EU countries abstain, while those in favor argued that a failure to act would risk undermining the European car market. The tariffs will apply to Chinese EVs for the next five years unless an alternative solution is reached.
Beijing has condemned the EU’s decision as protectionist. China’s Commerce Ministry labeled the move “unfair” and “unreasonable,” but left the door open for negotiations, suggesting that the issue could be resolved through dialogue.
The tariffs come at a delicate time for China, which has been relying on the sale of high-tech products, including electric cars, to revitalize its slowing economy. The EU is China’s largest overseas market for EVs, and any prolonged trade tensions could harm both economies. There are growing concerns that China could retaliate by imposing tariffs on other European goods, with industries such as French cognac expressing fears that their exports could suffer.
“We do not understand why our sector is being sacrificed in this way,” said a spokesperson for the French cognac industry, which relies on the Chinese market. “A negotiated solution must be found.”
The decision also raises concerns about the cost of electric vehicles for European buyers. With tariffs pushing prices higher, many fear that the already slow growth of EV adoption in Europe could stall further. In August, registrations of battery-electric cars in the EU dropped by 43.9% compared to the previous year, sparking worries that the market is struggling to keep pace with targets set for the transition away from fossil-fuel-powered vehicles.
In the UK, demand for electric vehicles hit a record high in September, driven by commercial deals and heavy manufacturer discounts. However, industry experts warned that these incentives might not be sustainable in the long run. The Society of Motor Manufacturers and Traders (SMMT) expressed concerns that the market is “not growing quickly enough” to meet upcoming sales targets for electric cars.
Under the UK’s Zero Emission Vehicle (ZEV) mandate, at least 22% of vehicles sold this year must be zero-emission, with the target rising to 80% by 2030 and 100% by 2035. Manufacturers failing to meet these quotas could face fines of £15,000 per car.
Several carmakers, including BMW, Ford, and Nissan, have urged the UK government to reconsider the current targets, citing economic factors such as rising energy and material costs as reasons for the higher prices of electric vehicles.
The average cost of an EV in the UK is currently around £48,000, which remains a barrier for many potential buyers.
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