Punitive tariffs on electric cars unleash a vicious circle for China and Europe – Kleine Zeitung

The EU has made a momentous decision: in a vote of all member states, punitive tariffs on Chinese electric cars of up to 35.3 percent were decided in order to counteract competition-distorting subsidies and support from China’s politics. Martin Kocher’s Ministry of Economics says they abstained from voting, meaning they voted neither for nor against punitive tariffs.

There is therefore massive astonishment in Austria’s divided automotive industry. Importers and trading houses were against the punitive tariffs, manufacturers like Magna Steyr in Graz were in favor because only then could one hope for new orders from China for Graz. The upcoming trip of a business delegation with (current) Minister Kocher to China in October brings with it so much material for discussion. China will not necessarily be happy about the abstention, orders will be at risk.

Before punitive tariffs: Europeans experience slump in China

Ten EU states voted for the punitive tariffs (like France, Italy) and twelve abstained. Only five spoke out openly against the tariffs. These include Germany and Spain, which will probably feel the consequences from China most quickly. Above all, the high-margin combustion engines from German manufacturers – the Volkswagen Group with Audi, Porsche as well as BMW and Mercedes – have to be prepared for a corresponding response in and from China. In a Chinese market that is vital for the German auto industry but has recently seen massive slumps.

Punitive tariffs unleash ruinous price wars

The EU decision also affects European manufacturers who produce in China with local partners. These include BMW (iX3, electric Mini), or the Volkswagen Group subsidiary Cupra with the E-Tavascan, which was developed in Europe. Nevertheless, punitive tariffs are due on the Tavascan, Cupra wants to keep the prices. The Denzel Group, which like other car dealers or importers (Porsche Holding, BMW) has spoken out against the punitive tariffs, must reposition its Chinese brands (BYD, MG, Maxus). BYD, for example, has pre-ordered around 2,000 vehicles in order to avoid punitive tariffs and so that prices do not have to be increased. All affected companies – European and Chinese – assume that the prices for electric cars will increase due to punitive tariffs. This unleashes a ruinous price war. In order to meet the EU’s CO2 targets, manufacturers have to sell electric cars, otherwise they face fines worth billions. A real vicious circle.

That’s how hard punitive tariffs hit the brands

These are the preliminary figures: BMW (partner Brilliance Automotive for the iX3) would have to expect 20.7 percent punitive tariffs, Mini (partner Great Wall Motor) would have to pay 21.3 percent, and Cupra and the Tavascan would have to pay 21.3 percent. Everyone is still hoping for a deal a la Tesla, which also produces its Model 3 for Europe in China and negotiated a punitive tariff of 7.8 percent. Chinese brands such as Saic (MG, etc.) are at 35.3 percent, BYD at 17 percent, Polestar and Volvo (EX30) are also affected. Geely (Smart) has to expect 18.8 percent. Even the cheapest electric car on the market, the Dacia Spring, would become more expensive (punitive tariff of 21.3 percent). All figures are provisional and will come into force from November. Negotiations are still ongoing.