When the European Union started research on Chinese production support domestic electric carsEuropean automakers ready for pain retaliation an increasingly assertive economic superpower.
However, such a thing It did not happen, at least not yet. Apart from some initial harsh words from China, both the government and companies like it DWELLING and SAIC cooperate in the conduct of the investigation. THE subdued the reaction shows the pressure the Chinese market is under Surplus EVwhich was exacerbated by the price war that Tesla unleashed in the last year.
After years growth spurts in China, local automakers are sending an increasing number of electric cars to Europe. While the market share of its Chinese models in Europe is still lowChina’s dominance in manufacturing plug-in modules vehicles put the country in a position to attack Japan global leadership in car exports.
“The Chinese will. they shot each other in the foot if they retaliated and worsened relations with one of their biggest trading partners,” said Matthias Schmidt, an independent auto analyst. “China has reached a point where it needs to start selling more cars beyond its borders».
Electric cars made in China, such as the crossover Dolphin BYD and its MG 4 MG engineowned by SAIC, have approx twice the average price in Europe compared to the domestic market, according to customs data.
The price difference stems from factors such aslow labor costs of China, generous subsidies and additional costs that companies have to absorb when sending cars abroad, incl responsibilities and shipping costs.
For example, BYD’s Dolphin sells in China 14,169 euros. Buyers in Germany must pay 35,990 eurosalthough the price is still significantly lower than the basic one VW ID.3.
The situation is similar with MG Motor. The Chinese company now s British the brand has been building its presence in Europe for more than ten years leads among Chinese brands in the region. Produced in Ningde, Fujian Province, the MG 4 is sold in Germany for €37,700 – 20,000 euros more than in China.
Her model 3 Tesla made in shanghai is approx 13,000 euros more expensive in the EU than in China. For China to keep the door open profitable Europe is now more important than ever, with the US largely out of bounds import duty 25% and generous purchase incentives available only on North American-built vehicles.
The future of hundreds of people is at stake non-profits electric vehicle manufacturers that have emerged as a result sweepers government subsidies and restrictions on driving hot cars in the centers of large Chinese cities.
In short, the fight for survival in progress THE Nio Inc.once a leader among Chinese electric cars, exporting models such as the sedan ET5 worth €59,900 in Europe, consider more cuts staff after the opening round where he shot the 10% of their employees. The company received another this week cash injection from the Middle East. WM Motor filed for bankruptcy after being sidelined by stiff competition.
In China, surplus The number of electric vehicles is unlikely to decline, with BYD increasing sales of electric and plug-in hybrids by 65% by November, which will most likely lead to larger The Chinese carmaker did achieve target 3 million units this year.
On the other hand, it is growing personal debt and slower income growth caused by long isolation the pandemic and China’s real estate crisis have curbed spending.
“The Chinese government has provided some support early stages auto industry, but gradually this support is ending,” said Xu Haidong, deputy chief engineer of the China Association of Automobile Manufacturers.
An EU investigation began in October targeting companies such as BYD, SAIC and Geely. It is politics that begins is aligned with the US trying to protect an industry that employs millions of workers.
The difference is that while the EU is looking for additional dutiesThe US distributes a number of subsidies attract investment with strict rules for local supply chains and production of electric vehicles in order to obtain incentives.
“The US and the EU agree that they do not want the transition to electric vehicles to be one transition to Chinese electric vehiclessaid Brad Setser, senior fellow at the Council on Foreign Relations. “Amendment to the Act on reducing inflation in the US would allow European car manufacturers equal access to cohesion, combined Reply”.
The initial tariffs are likely to be implemented from next July, but so what final decision requires approval by member states. In recent research in other areas such as electric bicycles and fiber optic cables, the EU has found scope subsidy of the Chinese state from 4% to 17%. Any penalty tariffs on EVs will be added at the current import duty of 10%.
Research on government subsidies for EV production indicated this getting worse China’s trade relations with Western countries. Tensions between Beijing and Brussels have flared over Europe’s efforts to de-risk its supply chains andworsening trade deficit EU with China in more than 400 billion dollars last year.
In this month’s business talks, se First since the upcoming summit in four years, Chinese officials have adopted a non-aggressive withstand. President Xi Jinping told EU leaders he wanted both sides to be key business partners able to build trusted relationships in supply chains. However, the Chinese Ministry of Commerce did not fail to state that the EU should Stop trade protectionism through electric vehicle research.
Of course, Western car companies, including Tesla, Renault and BMWI will hurt also from any higher tariffs because they export cars from China to Europe.
China’s position could also change if tariffs are imposed, p painful aftermath for the global automotive industry. BMW, Mercedes-Benz and VW sell between 33% and 40% their vehicles there and no manufacturer can do without batteries and other components for EVs that comes from from China. To at least get a taste of what could happen in October’s China limited export of graphite, used to make batteries.
“The most obvious possibility of retaliation would be increase the import duty imposed by China from 15% back to 25%Setser said. “Something the country would have every right to do.
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