Automotive News Europe — 2024-10-04
Automotive Industry
BMW CEO Oliver Zipse said the European Union’s vote on 4 October to impose tariffs as high as 45 percent on electric vehicles from China is "a fatal signal for the European automotive industry" and called for a quick, negotiated settlement.
The vote threatens a broader trade conflict with Beijing, which has already vowed to protect its companies.
The European Commission, the bloc’s executive arm, can now proceed with implementing the duties, which would last for five years. Ten member states voted in favor of the measure, while Germany and four others voted against and 12 abstained, according to people familiar with the results.
But the tariffs will not be implemented until 31 October at the earliest – and the European Commission said that it would continue negotiating to find an alternative.
The EU and China are exploring whether an agreement can be reached on a mechanism to control prices and volumes of exports in place of the duties.
Ursula von der Leyen, the president of the European Commission, defended the proposed tariffs, saying that the electric vehicle sector holds huge potential for Europe's future competitiveness and green industrial leadership.
"EU car manufacturers and related sectors are already investing and innovating to fully develop this potential. Wherever we find evidence that their efforts are being impeded by market distortions and unfair competition, we will act decisively," von der Leyen said.
The decision by the EU comes after an investigation found that China unfairly subsidized its industry. Beijing denies that claim and has threatened its own tariffs on European dairy, brandy, pork and automobile sectors.
Automakers, trade groups and government ministers quickly weighed in on the vote, which follows the European Union’s largest ever investigation into anti-competitive practices.
'Fatal signal'
"Today's vote is a fatal signal for the European automotive industry,” BMW's Zipse said. “What is needed now is a quick settlement between the EU Commission and China to prevent a trade conflict from which no one gains."
"The fact that Germany voted against the tariffs is an important signal and increases the chances for a negotiated settlement," said Zipse, who is a former president of ACEA, the European automakers’ lobbying group.
Volkswagen Group, which has nearly 40 factories in China that build cars and components, called on the EU and the Chinese government “to constructively continue the ongoing negotiations for a political solution."
"We stand by our position that the planned tariffs are the wrong approach and would not improve the competitiveness of the European automotive industry," VW said in a statement.
Mercedes-Benz said the vote could have “far-reaching negative consequences” and called for a negotiated settlement as well as a postponement on enforcing the measures.
Chinese EV makers have been under provisional tariffs since July, and in the past months a number of automakers have won reductions in the tariffs, which range from less than 10 percent to 35 percent, depending on degrees of cooperation with EU authorities during the investigation.
Chinese companies with a big presence in Europe criticized the vote, including Zhejiang Geely Holding, which counts among its subsidiaries Volvo as well as Poletar, Lynk & CO, Zeekr and Lotus, and has a 50 percent interest in Smart.
"Geely Holding expresses great disappointment in the Commission's decision. The decision (...) is not constructive and may potentially hinder EU-China economic and trade relations, ultimately harming European companies and consumer interests," the group said.
MG Motor France, the national subsidiary of the MG brand, which is owned by SAIC, said the vote would “slow down” the transition to EVs in France, which voted in favor of the tariffs. It said it would not raise prices on EVs in 2024.
"The European Commission is planning to excessively tax the 100% electric vehicles offered by MG in France, thereby slowing down the transition to more virtuous individual mobility which the same Commission has called for by 2035," MG France said.
Stellantis, which has recently taken a stake in a Chinese brand, Leapmotor, said it supported free and fair competition and that the sector was under pressure from carbon reduction plans and "the Chinese global commercial offensive."
Europe’s major automotive lobbying group, ACEA, said it "took note" of the vote and that “we also acknowledge the ongoing parallel efforts of Brussels and Beijing to negotiate a possible alternative to countervailing duties.”
Clepa, which represents European parts makers and suppliers, said, "Tariffs are at best a temporary solution to restore the level playing field, but the structural approach cannot be the unravelling of global supply chains, trade and investment."
Higher prices
The president of Germany’s automotive lobby group, Hildegard Müller, said the proposed tariffs would increase prices for consumers in addition to risking a trade war. "The potential damage that could be caused by countervailing duties is therefore greater than the potential benefits of the instrument," Müller said.
In contrast, France’s PFA, which represents the automotive sector, applauded the vote. "It is a good thing that a decision has received support from member states for the adoption of customs duties,” the group said. “We are in favor of free trade but within the framework of fair rules."
Many European finance ministers backed continued negotiations to avoid a trade war, including Germany’s Christian Lindner and Spain’s Carlos Cuerpo.
Benjamin Dousa, the Swedish minister for foreign trade, expressed hope that Volvo would not be penalized excessively. "We have had very positive signals just recently from the Commission that they hopefully could go ahead with individual solutions for the auto industry and for Volvo Cars specifically," he said.
"Sweden's line is that the best thing would be that China and the EU together can come to an agreement in relation to this problem," Dousa said.