Getting tough

Chinese EVs are continuing to gain to ground in Europe as gas prices hit a record high of €2.30 a litre ($9.91 a US gallon). Battery car registrations rose 62.7% in August compared to the same period last year, with Chinese EVs taking 92% of the new volume. Chinese cars now account for around one in ten of all cars on European roads, despite moves from Brussels to curb the expansion.

The EU is getting tough on Chinese car imports. The bloc has imposed tariffs ranging from 17-35% on Chinese EVs, which is on top of the 10% flat rate for all car imports. Nevertheless, analysts have noted that Chinese manufacturers have largely absorbed those costs, as there has been no significant price increase on the cars since the tariffs were introduced. There is now talk within Europe of also imposing minimum-price agreements, alongside a push towards localization of production, as well as “Made in EU” local-content rules. 

The latter proposal has also caused Brussels to ask the UK to raise its own tariffs on Chinese cars. The UK is seeking preferential treatment under the proposed “Made in EU” rules, but Europe is concerned that may result in the UK becoming a back door for Chinese vehicles to enter the market. Localization may not necessarily be of benefit to Europe’s largest car companies either. Chinese producers have made agreements to set up facilities in Spain, Poland, Hungary and Austria—but for Europe’s car giants in Germany and France, this has the same negative impact on its economy.