The European Union has introduced provisional countervailing duties on Chinese-made battery electric vehicles (BEVs) effective July 4, 2024.
While the updated tariff percentages show minimal change from those announced on June 12, they impose significant increases. BYD faces a 17.4 percent tariff, Geely 19.9 percent, and SAIC a steep 37.6 percent. Additionally, 13 automakers cooperating with the investigation but not sampled will encounter a 20.8 percent tariff, while others not listed will be subject to a 37.6 percent tariff.
Key Insights:
Increased Tariffs: The current 10 percent EU tariff on Chinese vehicles will rise to between 27.4 percent and 47.6 percent for BEVs exported from China. European and American automakers are also affected. The investigation remains ongoing until November 2, 2024, allowing time for negotiations, stakeholder responses, and independent review requests, which may influence the final measures.
Strategic Response by Chinese Automakers: The increased tariffs are prompting Chinese automakers to accelerate the construction of overseas plants and reorganize supply chains. TrendForce highlights that more than 14 new energy vehicle (NEV) factories or production lines will become operational between 2024 and 2026, primarily in Southeast Asia, Europe, and South America.
Developments in Overseas Expansion:
BYD’s Proactive Stance: BYD has already started production at its new plant in Uzbekistan as of June 2024 and is launching its Thailand plant on July 4. Additional facilities are under construction in Indonesia, Hungary, and Brazil.
Impact on the EU Market: Automakers with overseas facilities will be less affected by the tariffs, though some might face reduced profits or increased prices. Despite this, Chinese brands are expected to maintain competitive pricing. The market share of Chinese brands (excluding Volvo) in the EU BEV market is projected to grow from 8.2 percent in 2023 to 10 percent in 2024.
Implications for the Market:
Shift in Strategy: Automakers with smaller sales volumes in the EU may adjust their overseas market strategies, potentially shifting focus to other target markets or altering their European approach.
PHEV Advantage: The EU tariffs specifically target BEVs, excluding plug-in hybrid electric vehicles (PHEVs). Chinese automakers, with their advantages in PHEV technology and costs, might capitalize on the increasing demand for PHEVs in the European market.
Geopolitical and Global Impact:
Broader Influence: The decisions of the US and EU on tariffs will impact other countries as well. The strategies adopted by companies in response to these tariff barriers could positively or negatively affect industries globally. The influence of geopolitics on the automotive and EV sectors continues to intensify, challenging automakers to optimize their global layouts and supply chain designs.