Brussels, Belgium – The European Union may have to impose tariffs as high as 50 percent to halt the influx of inexpensive Chinese electric vehicles into the region, according to recent analysis. The EU’s extensive investigation into Chinese electric cars is nearing its conclusion, with experts warning that current proposed actions may not be sufficient to dissuade Chinese automakers.
Researchers at the Rhodium Group suggest that even with expected duties in the range of 15-30 percent, some Chinese manufacturers could still maintain profitable margins due to cost advantages. The report proposes that duties in the 40-50 percent range, potentially even higher for certain manufacturers like BYD, could be necessary to deter Chinese electric vehicle exports to Europe.
For instance, the BYD Seal U is priced at €20,500 in China and €42,000 in the EU, with estimated profits of €1,300 and €14,300 respectively. Despite facing a 10 percent EU tariff rate on imports, Chinese manufacturers like BYD could still find exporting to Europe lucrative.
Furthermore, Rhodium projects that BYD could lower prices to capture a larger share of the EU market by 2025 and 2030. The report underlines that various Chinese EV models would continue to benefit from significant profit margins in the EU.
The EU launched its investigation in response to a surge in imports that threatened domestic producers transitioning from traditional combustion engine vehicles to electric ones. Imports of EVs from China saw a substantial increase from $1.6 billion in 2020 to $11.5 billion in 2023, with Transport & Environment estimating that Chinese brands could hold a 20 percent market share by 2027.
The investigation has drawn criticism from Beijing, labeling it as protectionist and asserting the competitiveness of Chinese companies. EU officials are considering imposing preliminary duties as early as May, with a deadline set for July. Permanent duties would require approval from a majority of EU member states, potentially being implemented in November.
This development comes as Chinese automakers significantly ramp up production capacity, highlighting the need for exports to maintain returns. With the US and other countries already enforcing tariffs, Chinese manufacturers are turning to the EU as a key market. Rhodium predicts that EU policymakers could implement alternative measures to safeguard domestic industry, possibly restricting imports on security grounds or incentivizing EU-manufactured electric vehicles with consumer subsidies.
As the European Commission continues its evaluation of verified data, the future of Chinese electric vehicle exports to the EU remains uncertain.