The European Union’s additional tariffs on electric cars produced in China will come into effect on Thursday (July 4), prompting some car manufacturers to respond with measures to address the situation.
The EU Commission announced on June 12 that temporary tariffs ranging from 17.4% to 38.1% will be imposed on imported Chinese electric vehicles starting from July 4. These new tariffs will be implemented on top of the existing 10% tariff set by the EU. This move comes as a preliminary ruling in response to the EU’s anti-subsidy investigation into Chinese electric vehicles.
These temporary tariffs can be enforced for up to 4 months, during which the EU Commission will decide whether to implement permanent tariffs. The deadline for the decision in the anti-subsidy investigation into Chinese electric vehicles is set for November 3. Temporary tariffs will only be enforced once the investigation concludes and a decision to impose permanent tariffs is made.
According to Reuters, here are responses from some car manufacturers regarding the tariffs:
One car manufacturer plans to raise the price of the Model 3 to offset the cost increase due to the new EU tariffs.
So far, Tesla is the only carmaker that has announced price hike plans. Analysts predict that other car manufacturers producing in China will pass on some of the additional costs to consumers.
A Chinese car manufacturer known for its low-cost vehicles has established a joint venture with the Spanish car company EBRO-EV Motors to produce electric vehicles in Spain, aiming to offset the tariffs on imported vehicles to the EU.
Charlie Zhang, Vice President of Chery Automobile, stated that the production base in Barcelona is expected to start production by the end of the year. Zhang added that the production base is insufficient to meet the company’s medium to long-term plans in Europe, so the company is seeking a possible second production base.
A Swedish carmaker, controlled by China’s Geely, after experiencing operational losses in the first quarter, stated that it will need to take “mitigation measures” to counter the pressure from tariffs and car prices.
The company spokesperson further added that these measures may include reducing costs across the entire supply chain, but will not involve further job cuts.
Sources close to the company told Reuters that similar to BYD, the Chinese state-owned enterprise’s subsidiary MG has not decided whether to raise prices for electric vehicles sold in the EU. MG currently faces a temporary tariff of 38.1%, on top of the existing 10% tariff.
The Chinese car manufacturer facing the lowest tariff increase, with a 17.4% adjustment on top of the existing 10% tariff, has not decided whether to raise prices for electric vehicles sold in the EU, according to sources familiar with the matter.
The sources added that the company will not make any decisions before the temporary tariffs come into effect on July 4.
According to a report by Nikkei on Wednesday (July 3), BYD is set to start operations at a $486 million factory in Nakhon Ratchasima, Thailand on Thursday. This is BYD’s first investment in a Southeast Asian factory in Thailand, with an annual production capacity of 150,000 vehicles, most of which will be exported to other Southeast Asian countries and Europe.
For the EU, if 60% or more of the value of components is imported from countries subject to tariffs and the assembly value does not exceed 25%, it is considered as tariff evasion behavior.