EU Lifts Tariffs on Chinese Electric Vehicles, Market Landscape Changes Dramatically!

In recent years, the global automotive market has encountered growth bottlenecks and increasing competition, becoming an intensely competitive sector. Against this backdrop, a profound industry transformation is underway, with new energy vehicles and intelligent technology becoming the new development directions. Notably, Chinese automakers such as BYD and Geely, along with the American company Tesla, have rapidly emerged, capturing significant market shares and posing unprecedented challenges to traditional fuel vehicle manufacturers, particularly affecting the established brands from Germany, Japan, and South Korea.

Taking the three major German luxury car brands—Mercedes-Benz, BMW, and Audi—as examples, their recently released third-quarter financial reports show revenue declines of 6.7%, 15.7%, and 5.5%, respectively, with profits plummeting by over 50%.

On October 29, 2022, the EU announced anti-subsidy tariffs on Chinese electric vehicles, affecting brands such as SAIC, BYD, Geely, and Tesla, with a maximum tariff rate reaching 45.3%. This move was seen as the EU's response to similar policies from the U.S., reflecting a united stance against the expansion of the Chinese electric vehicle market.

On November 20, 2022, the Financial Times reported that the EU was planning further measures to compel Chinese companies to transfer battery technology to Europe, a strategy some have dubbed "piracy." This indicates that the EU is not only concerned with economic competition but also aims to enhance its industrial competitiveness through technology transfer.

On November 23, 2022, negotiations between China and the EU appeared to show positive progress. According to Reuters, Bernd Lange, chair of the European Parliament’s International Trade Committee, announced that the EU and China were about to reach an agreement to eliminate tariffs on electric vehicles imported from China to Europe.

Why did the EU suddenly change its tariff policy towards China? While the U.S. insists on high tariff policies, the EU has chosen a different path. In the past, the EU's stance on tariffs for Chinese electric vehicles aligned with that of the U.S. However, two months ago, the U.S. decided to impose tariffs of up to 100% on Chinese electric vehicles, prompting the EU to propose an anti-subsidy tax plan that could impose up to 35% tariffs on Chinese companies. Many believed that this would make the European market increasingly difficult for Chinese electric vehicles to enter.

However, there has been a dramatic shift in the situation. The U.S. approach has prompted the EU to reassess its position, leading the EU to consider cooperation with China. The U.S. actions were just one factor in the EU's change of heart; the EU has its own considerations. There have been internal divisions within the EU regarding its stance toward China; the previous imposition of tariffs had led to Chinese counter-subsidy investigations on EU exports of dairy products and brandy, sparking protests from European businesses and the public against trade conflicts with China.

There are also divisions within the automotive industry. Some countries and companies believe that blocking Chinese cars can protect their domestic automotive supply chains, while others argue that China has clear advantages in supporting technologies and supply chains for electric vehicles. For the EU to develop its domestic automotive manufacturing sector, cooperation with China is seen as the best path forward. Moreover, EU electric vehicle manufacturers have been reliant on China for raw materials and critical components. Europe has attempted to pursue a self-sufficient route, but the bankruptcy of a Swedish battery giant highlighted the difficulties of this strategy.

According to data from the General Administration of Customs, bilateral trade between China and the EU has shown volatility in recent years. In 2021, bilateral trade reached a historic peak, with a total import and export value of $828.112 billion, a year-on-year increase of 27.5%. In 2022, bilateral trade continued to grow, reaching $847.325 billion, up 2.3% year-on-year. In 2023, bilateral trade between China and the EU amounted to $782.987 billion, a year-on-year decline of 7.6%. From January to October 2024, the bilateral trade value was $652.843 billion, a year-on-year decrease of 0.2%.

From 2023 to October 2024, the top five destinations for China’s new energy vehicle exports included Belgium, the UK, Spain, Australia, and Thailand. The countries with the most significant growth in Chinese automobile exports were Mexico, Malaysia, South Korea, Kyrgyzstan, Canada, and Uzbekistan. Chinese new energy vehicles are not only favored in high-end markets like Belgium and the UK but also show potential in emerging markets.