EU Gives Chinese EV Firms Last-Ditch Lifeline to Avoid Tariffs

A vow by China to keep up negotiations ‘until [the] last moment’ to stop EU from imposing steep tariffs on its electric vehicles has not yet yielded a concrete result — but has still given a small ray of hope to the country’s automakers.

Chinese EV-makers will now be able to make fresh submissions on ‘minimum import price’ undertakings to the European Commission, an EU spokesperson said on Thursday.

The decision marks a small breakthrough for ongoing negotiations between China and the EU, considering just three days earlier the Commission had said the deadline for price undertakings was closed.

Also on AF: China Vows to Negotiate With EU on EV Tariffs ‘Until Last Moment’

That was after Chinese EV-makers had made similar undertakings earlier, but the Commission rejected them all last week saying none of them “would eliminate the injurious effects of subsidies”.

How successful any fresh submissions will be remains to be seen, considering Chinese electric vehicle makers will continue to remain far cheaper than their Western rivals even despite the EU’s proposed tariffs.

According to a CNBC analysis, for instance, BYD’s newly launched ‘Dolphin’ model will be cheaper by more than $23,000, compared to Tesla’s base car Model 3, even after a 17% levy.

Chinese state subsidies have played a key role in helping the country’s EV-makers establish a steady supply chain over the past decade. Between 2009 and 2023, Beijing has extended $230.9 billion worth of support to the EV sector, according to the Center for Strategic and International Studies.

But with demand slowing in China and increasing local rivalry, EV-makers from the country have ‘flooded’ Europe. To make the European market unattractive for these Chinese EV exporters, the Commission needed to impose tariffs in the 40-50% range, the Rodium Group said in April.

In contrast, the highest tariff proposed by the EU is of 35.3%. And Chinese brands most popular in the region face levies in the 7-20% range.

EU wants China to reconsider retaliatory probes

Despite the lack of a concrete solution, China and the EU both vowed on Thursday to intensify efforts to avert the tariffs.

The pledge came on the back of a meeting between Chinese Commerce Minister Wang Wentao and EU trade chief Valdis Dombrovskis. Wang is in China this week — and has met officials from Italy and Germany — in an effort to avert the tariffs ahead of a key vote to ratify them.

The 27 member countries of the EU are planning to vote on September 25 on whether to impose the tariffs.

A Commission spokesperson said Wang and Dombrovskis held “frank and constructive” discussions.

“Both sides reaffirmed their political will to pursue and intensify efforts in finding a mutually agreeable solution, which would need to be effective in addressing the problem, enforceable, monitorable, as well as WTO-compatible,” the spokesperson said.

Dombrovskis also expressed “strong concerns” about China’s retaliatory trade investigations against EU imports of brandy, pork and dairy.

The probes — which could result in Chinese tariffs — were unwarranted and based on “questionable allegations”, Dombrovskis said.

China’s Ministry of Commerce said, meanwhile, said its probes “were initiated at the request of domestic industries” and fully complied World Trade Organisation regulations, according to state media.

“China has the responsibility to safeguard the justified demands and legitimate rights of its domestic industries,” the ministry said.

• Reuters, with additional inputs from Vishakha Saxena

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