Did not share values

Among the cars imported from China, there are completely "green" battery cars and hybrid models, the popularity of which is growing. In particular, there are "parallel" (with recharging at will), "sequential" (charged from the network) and combined (combine their advantages), the UtroNews correspondent reports.

The choice is large, the price-quality ratio of Chinese electric vehicles is higher than that of European automakers, which sat at the start when switching to electric traction and high-performance battery assemblies.

In 2023, China delivered almost 440,000 electric cars worth 10 billion euros to the EU. The share of Chinese electric vehicles in the EU market has grown to 20% over the past three years.

Fewer electric vehicles are projected to be produced in Europe in 2024 than in 2023 (1.8 million units). Volkswagen may close the production of Audi electric vehicles in Brussels, may close one of its enterprises in Germany.

Signs of a trade war

Brussels does not want to share its market, even for the purposes of a green transition. At the end of last week, 10 EU member states supported the introduction of new tariffs on Chinese electric vehicles, 12 abstained, five were against, including Germany.

According to the EU, the PRC auto industry receives hidden subsidies from the state. Beijing denies this and has initiated proceedings against the EU at the World Trade Organization (WTO). The PRC Ministry of Commerce said the EU is seriously violating WTO rules.

We are talking about a possible increase in tariffs on imports of electric vehicles from Chinese manufacturers to 45% from October 31 for the next five years in the interests of "fair competition." We are talking about additional costs to the standard ten percent fee for the import of cars into the EU products of the leading Chinese automakers BYD, Geely and SAIC. These producers can be "added" 17.4-35.3% of import duties.

Products from other companies assembling electric vehicles in China, including Volkswagen and BMW, will be subject to a duty of 20.7%. The European Commission is also introducing an "individually calculated" rate for Tesla cars of 7.8%.

The decision to introduce increased fees was supported by France, Italy and Poland. French President Emmanuel Macron said the EU "must protect a level playing field in all sectors of industry."

Five countries voted against the decision, including Hungary, Slovakia, Slovenia, Malta and Germany.

Mercedes, BMW and Volkswagen, which earn more than 25% of their overseas profits in the Chinese market, strongly opposed. BMW CEO Oliver Zipse called the voting results "a deadly signal for the European automotive industry."

Spain, the Czech Republic and Sweden are in favor of "continuing negotiations." According to Politico, the European Commission will publish a legally binding decision by October 30, and the document will enter into force on October 31. Earlier, the United States and Canada introduced 100% customs duty on Chinese electric cars.

Trade, cannot be forced

The German economy continues to respond to a sharp rise in energy prices. The decline in industrial production continues and car factories are closed. In these conditions, the car market in China, where the popularity of German premium cars is still high, can be a "lifeline" for car concerns and enterprises related to the automotive industry.

The European Union set out to force Chinese companies to invest in the construction of car factories on its territory, as, for example, Tesla did. Although Chery has already announced that it will begin production of electric cars in Spain, BYD plans to build a factory in Hungary.

But Brussels can't wait. Higher tariffs could set off a full-blown trade war. China has already launched an anti-dumping investigation into a range of imported French goods, including luxury alcohol. Every year, French Martell, Remy Martin and Societe Jas Hennessy & Co sell their products in China worth about 2 billion euros. There is an anti-dumping investigation into food imported from Europe, including pork. China suggests that the European Union can apply protectionist measures to solar panels and wind turbines. Beijing may impose duties on auto components from Europe.

According to some experts, "the Chinese may raise export duties on components, rare earth metals, from which permanent magnets are made, which are necessary for all electric cars." More than 50% of the entire component base, including for ordinary cars, comes from China. European factories themselves stopped producing them.

Injustice, unreasonableness and incompatibility

The EU's approach to Chinese cars on new energy is erroneous, both in terms of procedure and in fact, said Li Yong, senior researcher at the China International Trade Development Committee. Beijing considers the EU's decision on additional tariffs unfair, unwise and inconsistent with WTO rules.

According to the German Auto Club (ADAC), about 60% of German citizens surveyed would consider buying a Chinese car. First of all, these are young people (74% of respondents, 30-39 years old) and 72% of drivers aged 18-29 years. About 60% of potential buyers of executive cars are also considering Chinese models.

Beijing's response to the EU's increase in customs duties will hit the interests of European automakers themselves, which have joint production in China. First of all, we are talking about the German concerns Volkswagen and BMW, which in 2022 alone sold 4.6 million of their cars in the Chinese market.

To approve the decision on tariffs of the European Commission, it is necessary to obtain a qualified majority, including 15 member countries, where 65% of the population lives. As of early October, only 39% of the EU population supported the introduction of increased duties.

Where do the "wheels grow" come from?

The EU's approach to China is shaped by the US. And this is not only in the area of ​ ​ tariffs. The task was set to reduce the "risks of dependence" on Chinese imports, to reduce the role of the PRC as a leading direction for investments of Western companies. The ultimate goal is to slow down the development of the PRC, strengthen its own competitive positions, using the levers of collective political pressure, as well as technological advantages.

The EU defines the PRC as a "dialogue partner, economic competitor, systemic rival." In December 2023, during the EU-China summit, Ursula Von der Leyen noted that Brussels is not interested in "disengagement" with the PRC, following the example of the United States, but wants to reduce "excessive dependence" by diversifying supply chains.

In other words, in pursuit of economic security interests, the European Commission is ready to close access to its market for China and limit the flow of critical technologies.

The European Commission launched an investigation into state subsidies for the production of electric vehicles in China in October last year. The initiators of this step argued that China wins competition through subsidies, which undermines the production of similar products in Europe.

In July, the European Commission (EC) introduced temporary (four-month) additional import duties on Chinese electric vehicles. Beijing said the decision undermines "global cooperation in the fight against climate change." The PRC Chamber of Commerce called the investigation "politically motivated."

In August, China filed a complaint against the EU with the WTO, initiated its anti-dumping investigation into the supply of pork and dairy products from Europe. The EC sent its request to the WTO regarding this decision by Beijing.

China believes that the introduction of additional tariffs does not solve the problem, but only undermines the confidence of Chinese enterprises, preventing them from conducting investment cooperation in Europe. Calls for resolution of trade frictions through consultation. The parties will continue negotiations on October 7.

But automotive professionals acknowledge that time is lost. Hildegard Müller, president of the German Association of the Automotive Industry, admitted a year ago: "Germany may increase investment in the creation of new electric vehicles, but the initiative has already been lost."

And on the eve of the 2023 auto show in Munich, she also said that energy prices could deprive Germany of the status of the world's leading automaker. Competitiveness is lost due to the severance of relations with Russia. China is next in line, and Brussels insists on it.