Which models are affected?

2024-07-04 15:00:00

Romain Rouillard / Photo credit: GARRY LOTULUNG / NURPHOTO / NURPHOTO VIA AFP
July 4, 2024 at 5:00 pm

The European Union is tightening the screws. In order to combat unfair competition in the electric vehicle market, the European Commission confirmed on June 12 that it would impose specific tariffs on electric vehicles produced in China. As a precautionary measure, additional taxes will be imposed on relevant manufacturers starting this Thursday.

To justify the decision, the European Commission relies on an investigation launched in 2023 that revealed how these manufacturers in China were able to benefit from the government’s huge subsidy system. According to Brussels, this is a form of dumping that penalizes domestic manufacturers that do not benefit from this stimulus. In particular, according to the Atlantic Council, a US think tank, almost 40% of China’s electric vehicle exports go to the EU.

Surcharges range from 17% to 38%

To assess this phenomenon, the European Commission sent a questionnaire to the manufacturers concerned. The aim is to exchange as much information as possible between these manufacturers, the Commission and the Chinese government. As a result, Brussels imposed surcharges ranging from 17% to 38%, depending on the level of cooperation and transparency of the above-mentioned manufacturers, with the lowest sanctions against BYD and the highest against the former British manufacturer MG, which has since passed under the Chinese Pavilion. For the other countries, the average tariff is 21%.

Therefore, all BYD and MG models, especially MG4Companies that are very successful in France will have to pay this new tax. The last-mentioned model, which currently starts at less than 25,000 euros, could lose its economic advantage in front of the Renault Megane e-Tech, whose European competitors are more expensive. We can also cite the model U5 and U6 d’Aiways Even the most confidential All living things 3small urban intersections, and Xpeng G9a large SUV, priced from €59,990.

But Western manufacturers are not immune, with some producing one or more models in China. BMW With his iX3 And also from all the manufacturers under the Chinese Geely Group. As part of its joint venture with Mercedes-Benz, it is responsible for producing news Smart #1 and #3two 100% electric SUVs that no longer have much in common with the brand’s famous micro city cars. lotus Including SUV Elektre and sedan Emea All are produced in China. Volvo Your SUV must also comply with this regulation EX30even if the production of this model will soon have to be transferred to Belgium.

Dacia Spring, the biggest loser from these new taxes

small Dacian SpringThe fact that the second-best-selling electric car in France is deprived of the ecological dividend due to where it is produced is also worrying. Its starting price is less than 20,000 euros and may be adjusted upwards. Finally, Teslahas a large factory in Grünheide, Germany, where it continues to assemble its Model 3 In China, there is no way to evade the new tariffs. Mini Cooper E, Cooper SE, Aceman E and Aceman SEthis Honda e:Ny1 and Cupratavascan is also part of the list.

It has yet to be determined how these taxes will be reflected in the sales price. “These rights apply to the import price. The leverage is therefore even more important because between the import price and the price including taxes, there is the entire distribution profit component, which currently fluctuates between 25% and 35% of the vehicle price. Chinese companies can achieve quite attractive operating margins in France while remaining competitive, but for some they will have to raise prices,” explains Renaud Kayanakis, automotive expert at Sia Partners.

What increased?

Then two solutions will be offered to the manufacturers concerned. “The Chinese will either sell at cost to continue to penetrate the market (which is possible), or increase the price including tax and risk making customers choose between Renault 5 or BYD at the same price”, deciphers Renault Kayanakis. According to estimates by the professional media ArgusIf the manufacturer passes on all these new tariffs, the price of the Dacia Spring will increase by almost €4,000.

On Thursday, the European Union Chamber of Commerce in China condemned “protectionist measures” motivated by “political factors”. In recent weeks, Beijing has not hesitated to raise concerns about possible retaliation. “We have to understand that if you cut off the European market from China, it’s OK because they have a domestic market to serve. But this is not the case for German manufacturers. If you take away the Chinese market, it’s a big market, Renaud Kayanakis concluded. The final decision will be made in November.

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