EU tariffs on Chinese electric vehicles will accelerate European factory closures

According to the European Automobile Manufacturers’ Association (ACEA): On 4 October, EU member states voted to advance a proposal imposing explicit countervailing duties on imports of Chinese-made electric vehicles. Regulations implementing these countervailing measures are expected to be published by the end of October. ACEA maintains that free and fair trade is vital for establishing a globally competitive European automotive sector, with healthy competition driving innovation and consumer choice. However, it also emphasised that a comprehensive industrial strategy is essential for Europe’s automotive industry to remain competitive in the global electric vehicle race. This includes securing access to critical materials and affordable energy, establishing a consistent regulatory framework, expanding charging and hydrogen refuelling infrastructure, providing market incentives, and addressing various other key factors.

Previously, the United States and Canada have countered the influx of Chinese electric vehicles through ‘implementing tariff protectionism’.

Gaishi Auto News, 14 October: Stellantis CEO Carlos Tavares stated that EU tariffs on Chinese-made electric vehicles would accelerate the closure of European manufacturers’ factories. This is because EU tariffs would incentivize Chinese automakers to build plants in Europe, thereby exacerbating the issue of overcapacity in European factories. As Chinese automakers strengthen their commercial footprint in Europe, governments across the continent—including Italy—are courting Chinese manufacturers to establish local production facilities. Domestic manufacturing in Europe could partially circumvent the EU’s impending tariffs on Chinese EVs.

Speaking at the 2024 Paris Motor Show, Tavares described tariffs as a ‘useful communication tool’ but cautioned against unintended consequences. He added: “EU tariffs exacerbate overcapacity within Europe’s manufacturing ecosystem. Chinese automakers circumvent tariffs by establishing factories in Europe, a move that may accelerate plant closures across the continent.”

During an interview with Italian media, Tang cited the example of Chinese EV giant BYD, which is constructing its first European vehicle assembly plant in Hungary. Tang further noted that Chinese manufacturers would not establish plants in Germany, France, or Italy due to cost disadvantages in these energy-intensive economies. Tang further highlighted Italy’s excessive energy costs, which he noted are twice those of Stellantis’ Spanish production facilities. ‘This represents a significant disadvantage for Italy’s automotive sector.’

It is understood that BYD plans to establish additional factories in countries such as Hungary (scheduled for 2025) and Turkey (2026), which would help alleviate import tariff burdens for both manufacturers and consumers. It also intends to compete directly with German and European brands by launching models priced between US$27,000 and US$33,000 (€25,000 to €30,000).