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[Debate] Will Chinese Electric Vehicles Take Over the European Market?

Daniel Kim Views  

Wariness against Chinese electric vehicles and concerns over the rising market share of Chinese electric vehicles in Europe
EU has predicted a response to Chinese electric vehicle companies through an anti-subsidy investigation

Discrimination against Chinese electric vehicles begins in Europe

가성비-전기차-신차-중국-해치백
Source: Nammi

According to reports from Chinese business media Caixin and Reuters, the European Union (EU) is establishing a policy to strengthen the registration of Chinese-made electric vehicles. It is reported that preparations will begin to impose a Countervailing Duty System on Chinese electric vehicles as early as July of this year.

EU’s European Commission recently issued an emergency directive to customs to strengthen registration procedures for Chinese-made electric vehicles. This can be interpreted as a measure to apply tariffs on Chinese electric vehicles.

※ Countervailing Duty System: This refers to a tariff imposed by an importing country to protect its own industry when an exporting country directly or indirectly provides subsidies for the production and export of products, causing damage to the importing country’s industry.

From Europe’s perspective, China is a thorn in its eye

니오-NIO-ET9-전기차-중국-테슬라-포르쉐-파나메라
Source: NIO

The EU’s strong attitude and actions are due to a sense of crisis that Chinese electric vehicle brands will dominate the European market. Since October 2023, imports of Chinese electric vehicles have increased by more than 10%, and the market share of Chinese electric vehicles in Europe has reached 8% in 2022. Furthermore, the market share is predicted to reach 15% by 2025.

In addition, the Chinese government’s subsidies for Chinese-made electric vehicles are also considered a major cause.

Does the above prediction mean that Chinese electric vehicles are significantly ahead of European electric vehicles in terms of marketability? The biggest reason is the cost-effectiveness of Chinese electric vehicles. The base price is low, and when electric vehicle subsidies are applied, it becomes an attractive option to purchase. On average, Chinese electric vehicles are about 20% cheaper than European electric ones.

A huge loss is possible if no action is taken

BYD-가성비-중국-전기차
Source: BYD

According to a report published by Allianz Trade, a subsidiary of Allianz Group, the annual potential loss of the European automobile industry will exceed 7 billion euros (about $ 7.65 billion) by 2030.

EU believes that the Chinese government has been providing subsidies in the following ways to promote Chinese brand electric vehicles:
□ Direct cash subsidies provided
□ Tax reduction
□ Export tax refund
□ Provision of loans and export credit guarantees through state-owned banks

In particular, it has been pointed out that the oversupply of Chinese batteries through major battery manufacturers such as CATL is also a problem.

Besides, the US tariff on Chinese electric vehicles reaches 27.5%, but in Europe, it is only 10%, so some experts say that the European market is a good environment for Chinese electric vehicle companies to target.

Daniel Kim
content@viewusglobal.com

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