European authorities have gone to great lengths to stop the import of Chinese electric vehicles, fearing that low-cost models from the East are harming the European market and putting domestic manufacturers at a disadvantage. But now China is counterattacking.
Now, amid ongoing clashes with European regulators, China has ordered its automakers to suspend investments in EU countries.
According to ReutersChina has instructed its automakers to stop major investments in European countries that support higher tariffs on Chinese-made electric vehicles. This follows new EU tariffs, up to 45.3%, implemented after a year-long investigation that divided the bloc and prompted a response from Beijing.
At an Oct. 10 meeting at China’s Ministry of Commerce, automakers such as BYD, SAIC and Geely were advised to suspend large investments in countries supporting the tariffs. Foreign carmakers at the meeting were also encouraged to invest in EU countries that opposed the tariff plan, while using caution in those that abstained.
We remind you that days ago the Chinese battery company SVOLT closed its operations in Europe. Chinese electric vehicle battery maker SVOLT Energy plans to shut down its operations in Europe by January 2025, in a move that clearly signals China’s withdrawal from the market and declining EV sales in Europe. as reported by Nikkei.
Great Wall Motor-linked SVOLT will close its German subsidiaries and lay off staff, a source said.
Chery Exceed 2024
Poor EV sales and financial pressures have pushed Chinese battery maker SVOLT to close all its European operations, including its Frankfurt headquarters, according to the same report.
According to Reutersthe move suggests that “the government is seeking leverage in talks with the EU to find an alternative to the tariffs.”
The move makes sense, because just hours before this news it was reported that the European Union was sending officials to Beijing for further talks to explore alternatives to tariffs on Chinese electric vehicles.
Reaching an agreement to replace the new tariffs remains complex, with plans still in development, but the two sides are exploring a “price commitments” agreement to regulate export prices and volumes as an alternative to the tariffs.
Bloomberg writes that after eight rounds of talks, the proposals on the table still fall short of EU standards, including WTO compliance and applicability requirements.
Negotiators have recently made progress considering how to simplify the terms of potential price commitments, particularly for new electric vehicle models not yet exported. One goal is to avoid cross-compensation, where price deals on electric vehicles could be offset by sales of hybrid or other products.
One problem with the deal is that China requested not differentiated tariffs, but a single agreement, with a single tariff, covering all automakers, from BYD to SAIC Motors to BMW-Brilliace. The EU, however, has applied different duties for different companies.
At the same time, sales in China are going very well for Chinese companies, so much so that there is no longer any need to grant the strong discounts that were granted in 2023.
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