The European Union is considering imposing tariffs on cheap Chinese electric cars, but researchers believe that the proposed tariffs may not be high enough. According to experts, tariffs of 50 percent are necessary to prevent a flood of Chinese electric cars in Europe. However, reports suggest that even with tariffs set at the high end of the scale, Chinese manufacturers could still make profits.
Researchers argue that this may not be enough to deter Chinese manufacturers who receive significant cost advantages. For example, the BYD Seal U SUV is sold for half the price in China compared to the EU. Import and customs costs add around 13,000 euros to the price in the EU, while Chinese production costs are low due to large car factories, which allows them to price cars competitively in the European market.
Chinese companies are already gaining market share in Europe, with projections showing that they could capture 20 percent of the Union market by 2027. The European Commission is expected to make a decision on tariffs by the end of the year, with temporary tariffs possible as early as May or June. However, even if these tariffs are imposed, they may not have a significant impact on Chinese companies’ profitability and market share.
The impact of tariffs extends beyond Chinese brands and affects companies like Tesla who manufacture cars in China and export them to Europe. Additionally, Chinese companies are investing in factories within the EU, with BYD already building one in Hungary. Last year four new Chinese brands entered the Finnish market with more expected to come ashore this year.