A new analysis concluded that the European Union (EU) will have to impose higher taxes than expected on Chinese electric vehicles to curb their imports.
The Rhodium Group predicts that the EU will impose duties of around 15% to 30% on imported Chinese electric vehicles. However, in a recently released analysis, the company stated that these rates are unlikely to be sufficient to stop competition from China.
Even if customs duties are at the upper end of this range, some Chinese producers will still be able to generate comfortable profit margins on the cars they export to Europe due to the substantial cost advantages they benefit from.
It is read in the group's report, cited by CNBC.
This analysis by Rhodium Group comes in the context of the ongoing anti-subsidy investigation in the EU into imports of electric vehicles from China – an investigation that the country has already admitted to fearing, due to the “distorted and unobjective” conclusions that may result from it.
It is recalled that the European Commission launched, in September last year, an investigation into the possibility of imposing taxes, with the aim of protecting EU manufacturers against imports of cheaper Chinese electric vehicles. This is because, according to the European entity, they may be benefiting from state subsidies.
According to the analysis, Chinese companies like BYD can sell cars at much higher prices and profit margins in regions like the EU compared to the domestic market, despite paying a fee related to customs duties.
The report states that BYD will likely have to reduce prices to achieve its goals of gaining greater market share in the EU. Even so, a rate of 30%, considered by the Rhodium Group, would still provide enough margin to do so.
Considering this BYD example, “much higher duties, of around 45%, or even 55%, would probably be needed for fiercely competitive producers.” This, in order to “make exports to the European market unattractive in commercial terms”.
Tags: Europe raise taxes stop imports Chinese electric vehicles
