The European Commission has announced revised tariffs on Chinese imported vehicles after reviewing feedback from interested parties on the import duties introduced on 5th July 2024. The new tariffs include reductions for manufacturers that did not cooperate and were not sampled during the investigation, such as SAIC, Geely, and BYD. Meanwhile, manufacturers that cooperated but were not sampled saw a slight increase in tariffs by half a percentage point. Additionally, Tesla has been assigned its own reduced tariff rate.

A recap of the tariffs

On 5th July, the EU introduced additional import duties on Chinese-made BEVs entering Europe. This action followed an investigation that provisionally concluded, “electric vehicle value chains in China benefit from unfair subsidies, posing a threat of economic injury to EU BEV producers.”

The provisional tariffs imposed affected key Chinese OEMs, with BYD, Geely, and SAIC facing additional import duties of 17.4%, 19.9%, and 37.6%, respectively. OEMs that cooperated in the investigation but were not sampled were subject to a blanket 20.8% tariff, while non-cooperating OEMs faced the highest rate of 37.6%.

Altered tariffs

After reviewing the comments on the provisional tariffs, the Commission has adjusted the rates. Notably, Tesla has received an individual duty rate, initially set at 20.8%, which has now been reduced to 9%, the lowest rate among the tariffs. Tariffs for SAIC, Geely, and BYD have been slightly reduced by 1.3 percentage points (p.p.) to 36.3%, 0.6 p.p. to 19.3%, and 0.4 p.p. to 17.0%, respectively. Meanwhile, tariffs for manufacturers that cooperated but were not sampled have been increased by 0.5 p.p. to 21.3%.

Additional changes

The revised tariffs also introduce a “new exporter” rate, set at the same level as that for cooperating but unsampled OEMs—an additional 21.3%. This category includes several Chinese exporting producers, including joint ventures with EU producers, that were not exporting during the initial investigation period. These companies, who would have otherwise faced the higher residual duty rate, have requested inclusion on the list of cooperating producers to benefit from the lower duty rate. While the specific companies are unclear, it is possible that BAIC’s Arcfox brand, which has recently started exporting to the EU, is among them.

Another decision made is not to retroactively collect countervailing duties.

The duties moving from provisional to definitive

Interested parties have until 30th August to comment on the new amendments. The Commission will then present the final determination to Member States, who will vote on whether to make the tariffs definitive by 30th October. If approved, these tariffs will remain in place for five years.

Tesla is positioned to gain the most from the revised tariffs. After the tariffs were first imposed in July, Tesla raised the price of its Model 3 in Europe by EUR 1,500. In contrast, BYD did not raise its prices despite the 17.4% additional tariff, indicating a larger margin on its vehicles sold in Europe compared to Tesla’s Chinese-made Model 3. This margin allows BYD greater capacity to absorb the tariff. Similarly, MG has not increased the price of its BEVs in Europe, despite its parent company, SAIC, facing one of the highest additional tariffs in July at 37.6%, further highlighting the significant margins Chinese OEMs enjoy when selling in Europe.

However, reports of Chinese-made EVs accumulating in European ports suggest that BYD and MG may still be selling off stock imported before the tariffs took effect, with potential price increases on the horizon.

Given Tesla’s competitiveness in Europe, the reduction of its additional tariff to 9% will only strengthen the company’s position. Despite the tariffs, Tesla’s Chinese-made Model 3 remains competitively priced within Europe. Even before the tariffs, the base Model 3 was EUR 4,000 less than the BYD Seal in Germany, despite both models being in the same segment. Although Tesla raised the price of the Model 3 after the provisional tariffs, it remains cheaper than the BYD Seal. With Tesla’s reduced tariff now lower than any Chinese OEM’s, the Model 3 is likely to maintain its competitive edge against other Chinese-made BEVs in Europe.

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Image Credit: Adobe Stock

Sources: EU Commission, EU Commission