Europe wants to increase customs duties from 10 to 30% for vehicles imported from China, in order to protect European manufacturers. The irony is that no European manufacturer wants this measure. Worse, they fear the consequences.
Europe wants to curb the invasion of Chinese electric vehicles by increasing customs duties against them. Under the pretext of wanting to protect European manufacturers from unfair competition, supposedly massively subsidized by the Chinese government, the European Commission wants to tax imports more heavily. However, European manufacturers are not in favor of protectionist measures. Everyone particularly fears a backlash from China against them.
Europe must decide on a financial sanction in June 2024, even if the results of the European elections on June 9 could change the situation somewhat. In the meantime, the German media Automobilwoche looked into what car manufacturers think of the measure on May 27.
From Stellantis to Renault via German brands, they are unanimous
Carlos Tavares, the boss of Stellantis, has long spoken out against the massive arrival of Chinese manufacturers in Europe, especially thanks to electric cars. He has since revised his judgment somewhat, by entering into a partnership with the manufacturer Leapmotor. However, like other European brand owners, he considers that these protectionist measures “ are a trap “. He particularly criticized the American decision to push customs duties to 100% on Chinese cars, but also on imported components. All this only creates a bubble in which the countries concerned fall significantly behind in technology, according to Carlos Tavares.
The boss of Renault and president of the association of European manufacturers, Luca de Meo, has also often taken a position against this decision by Europe to want to sanction Chinese manufacturers. Europe needs to be challenged by new players who innovate. This pushes European manufacturers to act quickly.
The same story is also heard among German groups. If Stellantis and Renault only have a very limited business in China, this is not the case for Volkswagen, BMW and Mercedes. For German manufacturers, China represents a crucial market. If China responds with higher tariffs, it could punish high-end models from Mercedes and BMW, which cannot be produced there. This could have serious financial consequences for German groups. Oliver Zipse, boss of BMW, is among the most virulent on the subject. He declared that “ customs duties are ghostly protections by which we harm only ourselves », quotes Automobilwoche.
The boss of Mercedes, Ola Kallenius, is instead calling for an alignment of customs duties with those of China so as not to antagonize Chinese political leaders. The Volkswagen group also opposes this EU decision. It must be said that Volkswagen is keen to maintain its position as the best foreign manufacturer on Chinese territory; the group above all does not want to offend the country’s politicians, nor its customers, with its positions.
A poorly written European text could cost European manufacturers dearly
The boss of BMW, Oliver Zipse, put his finger on one of the problems that the European measure could generate: “ More than half of Chinese imports into Europe come from non-Chinese companies. So we see very clearly how quickly we can shoot ourselves in the foot with that. »
Statistics for the first quarter of 2024 in Europe have proven that several models manufactured in China were on behalf of European (or foreign) brands: Dacia Spring, BMW iX3, new Mini Cooper Electric, Honda e:Ny1, etc.
Chinese manufacturers export many cars to European territory, but struggle to sell them, which also poses a congestion problem in European ports. Having them produced in Europe, as European political leaders want, will not make Chinese manufacturers less of a threat to the automobile market.
A risk exists: the conditions of the new customs duties could sanction manufacturers other than Chinese. However, according to Automobilwoche, it is also not excluded that the European text only sanctions manufacturers who are actually subsidized. But all this in any case looks like one hell of a gas plant to set up.
China will not remain without reacting, and this is what European manufacturers fear. Beyond sanctioning European vehicles sold in China in return, the government could also limit foreigners’ access to strategic materials: semiconductors, raw materials or even batteries.
Curbing Chinese electric cars in Europe is one thing, creating an open trade conflict with China is another. A topic to follow in our weekly Watt Else newsletter. Subscribe so you don’t miss any of these topics.
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