The impact of European tariffs on Chinese electric vehicle (EV) companies will be implemented in July.
According to the China Passenger Car Association (CPCA), retail sales of EVs increased 38.6% from the last year reaching 804,000 units. Cumulative sales in May were 3.249 million units with a 34.2% increase compared to the previous year’s performance. The EV penetration rate in May was 47%, 2.9% higher than the previous month.
Long-standing BYD is expanding its market share, while new companies like Huawei and Xiaomi are rapidly growing.
Samsung Securities Researcher Lim Eun Young noted, “With low costs of raw material, Chinese EVs are cheaper than internal combustion engine vehicles,” adding, “They are aggressively entering global markets through increased exports and construction of overseas factories.” Sales performance in the European market will determine BYD’s global performance.
In May, Tesla’s domestic sales in China increased by 29.9% with 55,215 units, while exports decreased by 50.7% with 17,358 units. Due to the impact of European tariffs, the price of Model 3 made from the Shanghai factory will inevitably increase from July. As the business model is shifting from EVs to AI, approval of the FSD and the distribution of the FSD were announced in China on the 17th.
Lim evaluated, “Tariff barriers in the United States and Europe will be the trigger for the restructuring of EVs.”
On the 14th of last month, Europe also announced its plans to impose tariffs on Chinese-made electric vehicles. The tariffs are added to the import duty of 10% and will be imposed up to 48.1% per company from July 4.
Europe is responsible for 28.3% of all Chinese EV exports and the impact of high tariffs is inevitable.
Lim noted, “BYD, Chery, Leapmotor are among those building local production systems to respond to tariff barriers,” adding, “However, companies with weak financial resources will not be able to export, making it difficult to resolve overproduction in China.”
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