Automotive News Europe — 2024-08-16
Automotive Industry
The provisional EU tariffs have pushed import duties to as high as 48% for some Chinese automakers.
European Union tariffs slowed the influx of Chinese-made electric vehicles in July 2024, as the bloc moved to protect its automakers from low-cost competition.
The number of new EVs that Chinese automakers such as BYD and SAIC’s MG registered in the EU last month fell 45% compared with June 2024, according to research from Dataforce, which compiled results across the 16 member countries that have reported July 2024 figures to date.
The drop may have been exaggerated by automakers rushing to get EVs to dealers before the added levies took effect on 5 July 2024.
“We saw a huge push from Chinese manufacturers” to empty stockpiles in June 2024, said Matthias Schmidt, an independent auto analyst based near Hamburg. “That likely caused an inventory burn.”
The provisional tariffs, pushing import duties to as high as 48%, are meant to shield an important EU industry from Chinese rivals that enjoy structural advantages in key areas such as battery technology that have benefited from state subsidies.
Political tensions remain high, with Beijing threatening to retaliate amid talks to resolve the matter.
Overall, the Chinese brands were not massively out of step with the 36% slide in EV sales for the 16 countries tracked by Dataforce.
BMW, Stellantis and Tesla also import Chinese-made EVs that are subject to the added EU tariffs.
The June 2024 spike was less pronounced for Western companies that were more cautious in managing their inventory, Schmidt said.
There is little in the July 2024 figures to suggest Chinese brands have tempered their ambitions to expand in Europe, the world’s third-largest regional automotive market behind Asia and the US.
Growing EV share
From a standing start in 2019, MG, BYD and others have steadily grown — their share of the EU’s electric-car market stood at 8.5% in July 2024, based on the Dataforce figures, up from 7.4% a year earlier (2023).
While EVs are still a small part of the entire European market, they are set to dominate over time as combustion cars are phased out.
BYD sold three times more EVs in the 16 markets in July 2024 than it did a year earlier. MG, part of Chinese state-owned SAIC, posted a 20% drop in July 2024 from a year earlier (2023), while sales at Polestar, a subsidiary of China's Geely, declined 42%.
“BYD’s increases are really softening the fall” for Chinese brands, said Julian Litzinger, an analyst with Dataforce.
BYD, China’s top-selling car brand, is pressing on with its expansion in Europe. Its sponsorship of the Euro 2024 football tournament in Germany exposed the company to 5 bn TV viewers.
For now, BYD’s pricing strategy in Europe remains unchanged after the tariffs. It expanded into Poland on 6 August 2024, signaling it’s prepared to live with higher duties as it builds a new plant in Hungary.
The new tariffs were put in place after an EU probe found Beijing subsidizes its EV industry to an extent that causes economic harm to the bloc’s automakers.
MG is subject to an additional 37.6% duty on top of the existing 10% rate, while Volvo owner Geely and BYD will pay 19.9% and 17.4% more, respectively.
The levies will become permanent in November 2024, barring a deal between Brussels and Beijing.
The tariff debate has coincided with a slowdown in global EV growth that has put pressure on manufacturers across regions. EU policymakers are seeking to balance job protection with the goal of phasing out new fossil fuel-burning cars by 2035.
The Dataforce figures for July 2024 include the largest EU markets, such as Germany, France and Italy. Results for all 27 countries will be available later in August 2024.
In Germany, Chinese brands made up 8% of vehicle registrations in July 2024, down from 13% in June 2024, according to Dataforce. In France, the drop was to 5% from 8%. In the UK, which is not an EU member, Chinese brands gained ground.
European manufacturers including Volkswagen Group and Stellantis have been sealing EV partnerships with Chinese counterparts to help lower costs and stay competitive. Chinese automakers are also speeding plans to assemble EVs in Europe.
BYD can afford to absorb the tariffs and move more decisively into Europe, said Schmidt, adding that a lack of shipping capacity is slowing its push.
“It is about perseverance,” Schmidt said. “They need to be tapping on the door in Europe if they want to make Europe work.”