Automotive News Europe — 2024-05-09
Automotive Industry
German automakers fear retaliation if the European Union imposes punitive import duties on EVs from Chinese manufacturers.
Top executives at BMW and Volkswagen warned the European Union against imposing higher import duties on electric vehicles from Chinese automakers, saying it could upend the bloc's Green Deal plan and harm automakers that import cars built in China.
The European Commission, which oversees trade policy in the 27-nation European Union, launched an investigation in October 2023 into whether fully-electric cars manufactured in China were receiving distortive subsidies and warranted extra tariffs.
"You could very quickly shoot yourself in the foot," BMW CEO Oliver Zipse told reporters after the German premium automaker reported quarterly results.
BMW imports Chinese-made Mini EVs and the iX3 into Europe.
Like its German rivals Volkswagen and Mercedes-Benz, BMW is heavily reliant on revenues from its Chinese business.
China is BMW's second-largest market after Europe, accounting for nearly 32% of sales in the first quarter.
"We don't think that our industry needs protection," Zipse told analysts on Wednesday, 8 May 2024, adding that operating on a global basis gives major automakers an industrial advantage. "You can easily endanger that advantage by introducing import tariffs."
Retaliation risk
Volkswagen, which also heavily relies on China, warned that potential duties generally carried a certain risk.
"There's always some sort of retaliation," Thomas Schaefer, CEO of the Volkswagen brand, told the FT's Future of the Car Summit.
Chinese automakers, including BYD and SAIC's MG, are targeting Europe with a range of competitively priced EVs, putting pressure on Europe's mass-market manufacturers.
In March 2024, the Commission started customs registration of Chinese EV imports, meaning they could be hit by tariffs from that point if the trade investigation concludes they are receiving unfair subsidies.
The probe is due to conclude by November 2024, but the EU could impose provisional duties in July 2024. Brussels should publish a summary of proposed provisional duties by 5 June 2024 and these duties would be imposed by 4 July 2024.
European Commission President Ursula von der Leyen said in Berlin on Wednesday (8 May 2024) that Europe needed to take steps to prevent China from flooding the bloc's market with subsidized electric vehicles.
French President Emmanuel Macron and Von der Leyen urged Chinese President Xi Jinping on Monday (6 May 2024) to ensure more balanced trade with Europe.
Chinese battery materials
Zipse told analysts that BMW and other automakers have "bilateral dependencies not only on the final product, but on the component side and raw material side."
Imposing duties could backfire because new EU CO2 emission standards that will require more EVs, which are reliant on Chinese battery materials, kick in 2025.
"There will be no single car in the EU without components from China," Zipse said.
He said that imposing tariffs would undo the EU's industrial plan to ensure the bloc is a frontrunner in cutting carbon emissions and developing the technology required to do so.
"There is no Green Deal in Europe without resources from China," Zipse said.