Chinese automakers are accelerating hybrid vehicle exports to Europe and introducing more models tailored to the market in a bid to circumvent new EU tariffs. This strategy highlights the challenges of the European Union’s electric vehicle tariff system, designed to counteract Beijing’s subsidies for its EV industry, which the EU claims disadvantage its car manufacturers.
Last month, the European Commission imposed various anti-subsidy import duties on BEVs produced by Chinese companies such as SAIC Motor, BYD, and Geely Automobile. The new charges, which took effect in late October, were based on estimates of the extent of Chinese state aid each manufacturer received.
Unlike in the United States, where the Trump administration has focused on uniting allies and partners to address China’s aggressive strategy, EU governments and the auto industry are split over how to respond to China. The EU fragmentation could weaken the bloc’s ability to push back against Beijing.
The tariffs will likely drive major brands such as BYD and Warren Buffett-backed Geely to expand production regionally in Europe, which they expect will help shield them from the new charges. BYD said it would start production at plants in Hungary and Turkey next year and plans to make PHEVs for Europe. It also will accelerate work on a plant in Germany where it is building its first European factory.
Analysts say it will take years for any new EU production to significantly impact the global car market. Still, they will serve as a counterweight to China’s desire for global EV dominance. “Look for China to pull out all the stops to win overseas,” Dunne said. “They’ll be willing to invest billions to do so.”
Amid the broader trade tensions, China has been stepping up efforts to promote the EV industry in other ways, including offering incentives and subsidies to purchase greener cars. This has sparked criticism from the European Union, which has warned that such actions could jeopardize the industry’s future in the country.
The new EU tariffs, expected to be in place for a decade, have made it more difficult for carmakers to compete against the growing number of low-cost Chinese EVs entering the market. However, analysts do not see the sweeping measures deterring many car buyers, who are increasingly aware of the environmental benefits of switching to electric transport. They are also gaining confidence in the reliability of battery-powered EVs, which are less likely to have breakdowns than conventional engines. In addition, the cost of charging stations is dropping. For instance, a French supermarket chain announced this week that it will offer free access to its public charging points for Uber drivers who switch to electric vehicles. The EV revolution has also opened up new business opportunities for companies like Carref our, which is expanding its network of outlets to sell a wide range of zero-emissions vehicles.
