Are cheap electric cars coming to an end?

After a long period of speculation, it has been confirmed that the US government will not impose import duties on Chinese electric cars. Following suit, the EU plans to increase tariffs on Chinese electric cars starting July 4th. This will result in significant price increases for electric cars from Chinese brands in the EU.

If a compromise is not reached with Beijing by Thursday, the EU Commission will impose tariffs to protect its car industry from competition from the Far East. German car manufacturers are concerned about the potential impact on their business and are still hopeful for a negotiated solution. The EU Commission is expected to provide details on the tariffs on Thursday, and they will be collected as security deposits from midnight on July 5.

The issue stems from the fact that the Chinese government has been heavily subsidizing domestic electric car manufacturers, enabling them to offer their cars in Europe at much lower prices than European competitors. The EU Commission has determined that these subsidies distort the market and pose a threat to EU industry, justifying the imposition of import duties to ensure fair competition.

There are concerns about potential retaliatory measures from China in response to the tariffs. The German Association of the Automotive Industry warns of the damage that could be caused by countermeasures from Beijing, as China is a significant market for German car exports. Various brands, including BYD, Volvo, Geely, and VW’s partner company SAIC, will be subject to different tariff rates based on their cooperation with the EU authorities during the investigation.

The provisional tariffs will be in place until November, pending a decision by EU heads of government on whether to make them permanent. There is likely to be heated debate among EU member states, with some supporting the tariffs and others criticizing them due to potential repercussions from China. Both the EU and China are accusing each other of violating trade rules, indicating a possible escalation in trade conflicts.