EU Tariff Imposition
Despite doubts and opposition from various Chinese and European sectors, on October 29, 2024, the European Commission issued a regulation imposing final countervailing duties on new electric passenger vehicles imported from China. The duties, ranging from 7.8% to 35.3%, took effect on October 30, sparking extensive public debate.
The Chinese Ministry of Commerce expressed its disagreement with the decision, stating it would not accept the ruling and has filed a complaint through the World Trade Organization’s dispute settlement mechanism. From November 2 to 7, technical teams from China and the EU held five rounds of discussions in Beijing, engaging in in-depth exchanges on the EU’s proposed price commitment plan in the countervailing case against Chinese electric vehicles. Some progress was made. China hopes to continue dialogue to jointly safeguard the stability and smooth flow of the global automotive supply chain, promote deeper cooperation between the Chinese and European automotive industries, and achieve mutually beneficial outcomes.
Sales of Chinese New Energy Vehicles
On November 11, the China Association of Automobile Manufacturers released the latest data showing that from January to October this year, new energy vehicles (NEVs) accounted for nearly 40% of all vehicle sales in China. NEV production and sales reached 9.779 million and 9.75 million units respectively, with year-on-year increases of 33% and 33.9%, making NEV sales 39.6% of total new vehicle sales.
Regarding exports, from January to October, China exported 4.855 million vehicles, marking a 23.8% year-on-year increase. Among these, NEV exports reached 1.058 million units, a 6.3% increase. The structure of NEV sales has shifted: in October alone, sales of fully electric vehicles reached 842,000 units, a 30.4% increase year-on-year, while plug-in hybrid vehicle sales rose to 587,000 units, up by 89.7%.
Notably, Chinese customs data show that in 2023, China exported 684,000 passenger vehicles to the European Union, of which 478,000 were fully electric, representing 26.9% of China’s total electric vehicle exports.
History of China’s Automotive Development
According to the National Development and Reform Commission’s overview of China’s new energy vehicle (NEV) development, China’s automotive industry began in 1953 with the construction of its first automobile manufacturing plant in Changchun. In 1956, China’s first domestically produced vehicle rolled off the assembly line there. In 2009, China became the world’s largest producer and market for automobiles for the first time, and by 2023, its annual automotive production and sales exceeded 30 million units. For nine consecutive years, China has ranked first globally in NEV production and sales, with over half of the world’s NEVs now on Chinese roads.
In 2009, China launched the “Ten Cities, Thousand Vehicles” initiative, which used subsidies to encourage the research, production, and sales of NEVs in major cities like Beijing, Shanghai, and Shenzhen. The government announced the end of its purchase subsidy policy for NEVs in late 2022, marking a gradual withdrawal of state support as the industry had successfully scaled from nonexistent to a significant market presence.
China has accelerated its industrial transformation, investing heavily in advanced productive capabilities, and fostering leapfrog growth in sectors like NEVs, power batteries, and photovoltaics. This progress has brought new hope for global green and low-carbon transitions. Automotive carbon emissions account for roughly 10% of global emissions, while NEVs emit over 40% less carbon across their lifecycle compared to traditional gasoline vehicles. As the world’s largest NEV market, China’s rapid NEV development will continue to support global carbon reduction and sustainable, low-carbon growth.
Competition and Challenges
Under the current situation of weak production capacity of electric vehicles in Europe, the entry of Chinese electric vehicles into Europe can not only fill some market gaps, but also provide European consumers with more cost-effective choices with Chinese cars with price advantages and good performance. At the same time, the rise of China’s electric vehicle industry has impacted the market share of traditional automobile powers, causing these countries to protect their own automobile industries through trade means. This trade war may bring challenges to the export and international development of Chinese electric vehicle companies. Specifically, the United States and Canada have imposed high tariffs on Chinese electric vehicles, and the European Union has voted to pass a proposal to impose tariffs on Chinese electric vehicles.
Dongfeng Motor announced the suspension of its plan to build a factory in Italy, and Chongqing Changan Automobile canceled its new car launch in Milan. After the EU announced the imposition of tariffs on China, many Chinese companies interested in the European market also chose to wait and see for the time being.
Cooperation and win-win
The EU’s move to impose tariffs may not really promote the development of EU electric vehicles, but also restrict EU consumers from enjoying more cost-effective Chinese electric vehicle services, and also restrict the EU’s technology and means to achieve energy conservation, emission reduction and carbon neutrality goals faster and at a lower cost. Imposing tariffs not only violates the basic principles of free trade and fair competition, but is also not conducive to China-EU automotive industry cooperation and green and low-carbon transformation. Protectionism is not a solution to the problem, open cooperation can only achieve mutual benefit and win-win results.
Note: The data in this article comes from the China Association of Automobile Manufacturers, and the relevant information comes from the National Development and Reform Commission of China