Will mostly affect TeslaOn Saturday, June 15, 2024 at 07:17:31 PM GMT+5, Chas Freeman via Salon <salon@listserve.com> wrote:--The Chinese EV boom is the result of a long-term and substantial policy.
Cumulative Chinese state spending on the EV sector was more than $125bn between 2009 and 2021, according to estimates by the Center for Strategic and International Studies, a US think-tank. China’s industrial spending was by far the highest among the world’s top economies. The CSIS researchers said their figures were conservative and clouded by China’s lack of transparency. … A Goldman report last month found that at the end of 2023, electric vehicles, solar cells and lithium-ion batteries together accounted for 4.5 per cent of total Chinese exports, up from 1 per cent in 2018. Europe was the biggest recipient, but the bank noted that most of the production was “for domestic consumption”.
Source: FT
EU tariffs on Chinese EV
Brussels is pushing ahead with Chinese electric vehicle tariffs that are set to bring in more than €2bn a year, brushing aside German government warnings that the move risks starting a costly trade war with Beijing. The European Commission is to notify carmakers on Wednesday that it will provisionally apply additional duties of up to 25 per cent on imported Chinese EVs from next month, according to people familiar with the decision. Brussels argues that Chinese EV makers benefit from subsidies that undercut their European rivals. The tariffs, championed by France and Spain, will raise billions of euros for the EU budget annually as sales of Chinese EVs grow in Europe. China, the bloc’s largest trading partner, exported €10bn of electric cars to the EU in 2023, doubling its market share last year to 8 per cent, according to analysts at Rhodium Group.
Beijing has warned it would retaliate as it seeks to persuade a majority of EU capitals to oppose the new tariffs, which would be on top of the bloc’s existing 10 per cent duties. Beijing is already applying a 15 per cent tariff on European EVs. Germany, Sweden and Hungary have said they do not approve of the move, fearing Chinese retaliation. EU officials say Berlin put pressure on Ursula von der Leyen, who is seeking a second term as commission president, to drop the anti-subsidy investigation. German Chancellor Olaf Scholz recently warned that “isolation and illegal customs barriers . . . ultimately just makes everything more expensive, and everyone poorer”. But intense lobbying by Scholz’s government “has not worked”, said a person briefed on the process. The commission was expected to increase its duties to about 35 per cent, the person said, still well short of the 100 per cent duties applied by the US. The additional tariffs in Europe will hit Chinese producers including BYD and SAIC, as well as companies such as Tesla which have factories in China. The duties may vary according to producer, depending on the level of subsidy the EU claims it has identified. The Kiel Institute, an economic think-tank, found that an extra 20 per cent tariff on Chinese electric cars would reduce imports by a quarter. It calculated that with 500,000 vehicles imported in 2023, this corresponds to an estimated 125,000 units worth almost $4bn. “The decline would largely be offset by an increase in production within the EU and a lower volume of EV exports, which would likely mean noticeably higher prices for end consumers,” the researchers concluded. The commission expects Chinese EVs to hold a 15 per cent market share in the EU next year. It says prices are typically 20 per cent lower than those of EU-made models. Valdis Dombrovskis, EU trade commissioner, acknowledged EVs were crucial for the green transition when he announced the investigation in October. But he added: “Competition must be fair.” His department had amassed evidence that Chinese carmakers and their suppliers received subsidised loans, tax breaks and cheap land, according to officials. Many EU carmakers have condemned the plan, fearing China might respond in kind or even block them from its market. European brands accounted for about 6 per cent of EV sales in the country in 2022. Germany exported 216,299 cars to China in 2023, a drop of 15 per cent on the year before; brands including Mercedes and Volkswagen also operate plants in the country.
Geely, one of the Chinese companies under investigation, owns Volvo of Sweden. Prime Minister Ulf Kristersson has joined Scholz and Hungarian premier Viktor Orbán, who has courted Chinese EV investment, in publicly opposing the EU tariffs. The three leaders would need to secure at least 11 other governments to overturn the commission’s decision on tariffs. Other central European countries such as the Czech Republic and Slovakia are expected to join the opposition. Exporters of food and luxury goods such as Italy are also concerned about retaliation against products from the country. But France, which pushed for the investigation to protect its own industry and force China to invest in production there, is unlikely to bend. Spain, another big car producer, has also indicated it would back tariffs. Member states will be asked to vote on the tariffs before November 2. Definitive duties are usually imposed for five years.
Source: FT
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