The European Union is considering imposing tariffs on cheap Chinese electric cars, but researchers believe that the proposed tariffs may not be high enough to prevent a flood of Chinese electric cars in Europe. Experts argue that tariffs of 50 percent are necessary to level the playing field and protect European manufacturers.
The Financial Times reports that the Rhodium Group estimates that Chinese manufacturers would still be able to make profits even with tariffs set at the high end of the scale. However, the European Commission is expected to set tariffs between 15-30 percent, which may not be enough to deter Chinese manufacturers who receive significant cost advantages.
One example given is the BYD Seal U SUV, which is sold for half the price in China compared to the EU. Import and customs costs add around 13,000 euros to the price in the EU, while production costs are low due to large car factories in China. This allows them to price cars competitively in the European market.
Chinese companies are already gaining market share in Europe, with projections showing that they could capture 20 percent of the Union market by 2027. The European Commission is expected to make a decision on tariffs by the end of the year, with temporary tariffs possible as early as May or June.
The impact of tariffs extends beyond Chinese brands and affects companies like Tesla who manufacture cars in China and export them to Europe. It also affects companies like Volkswagen and BMW who have increased their production capacity in China and are planning to expand their operations further into Asia. Additionally, it affects smaller European automakers who have been struggling financially and may not be able to compete with cheaper Chinese models without additional support from government subsidies or other forms of aid.
In conclusion, imposing higher tariffs on cheap Chinese electric cars could help protect European manufacturers from unfair competition and ensure a level playing field for all players in the industry. However, it may also result in increased prices for consumers and negatively affect trade relations between China and Europe.
