China’s new energy vehicle (NEV) exports grew at a slower pace in June due to the EU’s new tariffs on Chinese EV imports. However, this impact may only be temporary, according to industry officials.
China reported a slower pace of growth in new energy vehicle (NEV) exports in June, according to the China Passenger Car Association (CPCA).
Exports of China’s NEVs, including pure electric vehicles (EVs) and plug-in hybrid cars, fell by 15.2% in June compared with May, although they still rose by 12.3% year on year. Cui Dongshu, the secretary general of the CPCA, stated that China’s NEV exports faced temporary pressure, with export growth dropping to just above 10% from the previous annual range of 30% to 40%. He indicated that the European Union’s (EU) new tariffs had a significant impact on exports.
According to the CPCA report, exports of China-made Tesla EVs to the EU fell to their lowest level since the third quarter of 2022, when production at Tesla’s Shanghai factory was halted due to Covid -19 restrictions. The EU is the largest export market for China-made Tesla EVs, accounting for a 9.1% market share in Europe in January, according to EV-volumes. com.
EU imposes new tariffs on China-made EV imports
Last Friday, the EU confirmed that it would increase tariffs of up to 37.6% on EV imports from China, including Chinese-made western brands such as Tesla and even some European brands. The decision was made following the conclusion that EV manufacturers in China benefit from unfair subsidies from the Chinese government. The new duty ranges from 17.4% to 37.6% and took effect on 5 July. Based on trade data for 2023, every additional 10% increase in tariffs will add approximately $1 billion (€920 million) in costs for China’s EV exporters.
In response to the new tariffs, some Chinese EV makers have hinted at raising their export prices. The high-end market EV maker Nio stated that prices might need to be adjusted due to the tariffs. Xpeng confirmed that customers who placed orders before the new tariffs took effect will not be affected, but the company has yet to decide on future price adjustments.
However, the best-selling Chinese NEV brand, BYD, anticipates that some of its models will still achieve higher profits in the EU compared with China, even after the new tariffs – an additional 17.4% duty – is imposed. This is due to a price war in China that has squeezed profit margins for Chinese car makers. BYD sells cars in Europe at almost double the price they sell for in China. Additionally, BYD’s technological advantage allows it to reduce costs by up to 20%. The Chinese biggest EV seller plans to launch its most affordable model, the Seagull, in Europe next year.
Chinese EV markers prepare to expand EU plants
Chinese electric vehicle (EV) manufacturers are gearing up to establish production plants in Europe in response to the new tariffs imposed by the EU. BYD plans to establish an EV manufacturing facility in Hungary, focusing on producing electric cars with battery packs assembled before 2026. The Chinese NEV maker will also invest $1 billion in building an EV plant in Turkey as part of its strategy to expand its international presence.
In April, another popular Chinese brand, Chery Auto, signed an agreement with Spain’s EV Motors to build its first European factory in Catalonia. Additionally, the Chinese state-owned battery maker, CATL, increased partnerships with local car makers for battery supplies in Europe since 2023.
By setting up manufacturing facilities within Europe, these companies aim to circumvent the tariffs, reduce logistics costs, and cater better for the preferences of European consumers. According to AlixPartners, Chinese car makers are expected to gain 33% of the global automotive market share by 2030.
