Chinese Electric Cars Show Initial Success in Europe

According to a recent report from the American news network CNN, citing a study by a Swiss bank, by the year 2030, the market share of Chinese automakers in the global market could double, rising from 17% to 33%. This growth is primarily expected to come at the expense of market share held by European manufacturers. Tariffs are also expected to play a role, with the European Union currently imposing a 10% import tariff on electric cars from China, while the United States imposes a 27.5% tariff.

In September of last year, European Commission President Ursula von der Leyen announced an anti-subsidy investigation into Chinese electric cars. China responded with anger. The German government also appeared to take a reserved stance towards the EU's anti-subsidy measures. According to a confidential document obtained by Table.Media in December, "EU anti-subsidy taxes can protect the EU industry, but may also have negative consequences." For example, China could take retaliatory measures against German car manufacturers.

Despite such concerns, the European Commission officially launched the investigation process in early October. Experts anticipate that punitive tariffs will remain in the low double digits starting from around July 2024. According to Brussels' data, China currently holds an 8% share in electric car sales in Europe. However, as Tobias Gehrke and Filip Medunic wrote in a paper for the European Council on Foreign Relations (ECFR), most of these imported cars are currently models produced by American and European brands in China. For instance, this includes Tesla produced in Shanghai. Punitive tariffs could also impact European car manufacturers' exports to China.

The situation is far from clear-cut. While it is true that China subsidizes the industry, it wasn't until June that Beijing decided to launch a comprehensive plan worth 66 billion euros to stimulate the recently declining demand for electric cars. Until recently, about 20 EU member states have also been utilizing fiscal incentive measures to promote the sale of electric cars, including Germany. France, in fact, has excluded Chinese manufacturers from subsidies through intricate environmental regulations.
The European Union faces conflicting goals in the electric power sector. It is challenging to determine whether China's competitive low prices are genuinely based on unfair government assistance or primarily on low production costs. According to Bloomberg, BYD's success is largely attributed to the company introducing a broader range of affordable models in the domestic Chinese market. Western car manufacturers, such as Volkswagen, produce much more expensive electric models in China and around the world, making them unaffordable for many consumers.

Furthermore, since the spring of 2023, China has been engaged in a ruthless price war in the electric sector. The downward spiral of prices is not initiated by Chinese companies or the government but is sparked by the Chinese subsidiary of the U.S. electric car manufacturer Tesla. They continuously introduce new rounds of discounts.

Overall, the European Union faces the same conflicting goals in the electric car sector as it does in the solar industry: how to protect the development of a resilient domestic industry while not stifling the energy transition with rising prices? Because punitive tariffs inevitably raise prices. Tobias Gehrke and Filip Medunic wrote, "To win the battle for electric cars without shooting themselves in the foot, the EU needs a comprehensive strategy beyond tariffs." "In the electric car sector, reducing the risk from China means building a complete alternative value chain, from mining to cars.

(This article is reproduced from RFI, read the original source.)