The EU’s new EV import tariffs will make the market fairer | Axon’s Automotive Anorak

For the price of a ‘regular’ used car, the showrooms of an Eastern Bloc dealership could be an inviting environment, often crammed with bargain-priced and well-spec’d old Fiat cast-off models, equipped to the gunnels with standard ‘extras’ such as pop-up glass sunroofs, vinyl tops, a comprehensive tool kit and extended warranty the more mainstream car makers would usually charge extra for.

This practice of bargain priced ‘dumping’ was commonplace with the former Soviet bloc car makers, these ghastly cars being supported by their Communist governments to help gain much-needed foreign currency, the low prices going some way to compensate the inadequacies of these miserable machines.

Though former-Eastern Bloc makers such as Skoda and Dacia now make respectable cars, the likes of Lada thankfully withdrew from most export markets some time ago with FSO, Wartburg, Yugo, and others all now consigned to the history books.

These old low-price dumped Soviet-era horrors sprang to mind very recently when the latest round of import tariffs being applied to all new Chinese-built electric vehicles were announced in the USA (at 100 per cent), in Canada, and by the European Commission. For all EU member countries from Friday 5^th July, the European Commission has introduced new ‘special’ tariffs on all imported electric vehicles built in China.

This radical action is due to the EU Commission’s claims that new Chinese EVs are being dumped in Europe at artificially low and unfair prices that the European-based EV car makers simply can’t compete with, due to their higher costs for labour, components, taxation, and so on.

This new Brussels legislation is in a provisional trial period for now, and as yet does not apply to the UK, although this action for its consequences will inevitably follow here. It’s hoped it will help to pump up the retail prices of all Chinese-built EVs, such as the currently good-value MG4, BYD Dolphin, and GWM ORA O3. EU talks with the Chinese government are still ongoing, but for the moment the EU is imposing slight changes to the tariffs for individual Chinese EV manufacturers, as the USA plans to impose a 100 per cent blanket rate on all imported Chinese-built EVs into the States.

For now, the EU Commission’s actual duty rates will differ, with Brussels imposing a 19.9 per cent special duty on the imports of electric Geely models (potentially including the Chinese-made Lotus Eletre, Smart #1 and some electric Volvos). The EU import rate for SAIC’s vehicles (including those sold by MG and Maxus) will remain the highest at 37.6 per cent, with BYD cars attracting a 17.4 per cent import tariff.

Electric cars from other Chinese manufacturers that cooperate with the EU will be subject to a special duty of 20.8 per cent, but for companies that have not cooperated, the rate will be corrected to the same 37.6 per cent as SAIC products. The special duties – whether manufacturer-specific or in one of the two groups – are calculated in addition to the current ten per cent EU import duty that already applies. The actual customs duty is therefore ten percentage points higher and thus amounts to a maximum of 47.6 per cent on the price a new Chinese-made EV.

This includes not only Chinese vehicle brands but applies to all electric cars built in China, meaning that non-Chinese manufacturers who produce electric cars there and sell them in the UK and Europe must also bear these special tariffs. These include the Tesla Model 3 built in Shanghai, BMW with the iX3 from Shenyang and Cupra with the Tavascan from Anhui. If the companies have cooperated, they will have to pay 20.8 per cent special duty.

These additional new EU special tariffs mean that the duties are calculated but not yet collected for the time being. The provisional special duties will apply across the EU from 5^th July for a maximum of four months, until 5^th November 2024. By then at the latest, the EU member states must have adopted a decision on the definitive duties. If adopted, the special duties will then apply for five years, and the amounts calculated since 5^th July will then be collected retroactively.

The EU Commission presented the plans for the special tariffs in mid-June following a month-long anti-subsidy investigation. The investigation is said to have revealed that Chinese electric car manufacturers have unacceptable competitive advantages thanks to high subsidies from the Beijing government and can therefore offer their electric cars in Europe more cheaply than domestic manufacturers. For this reason, the special duties were not levied across the board, but rather on a manufacturer-specific basis according to the subsidies identified in the investigation.

Taking new electric car prices in Germany as an example, before the new 5^th July tariff was levied, a European-made Fiat 500e cost €30,900 against the Fiat-rivalling Elaris Dyo at €24,900, the Chinese-built EV being 24 per cent more affordable. It’s a similar difference with the BYD Dolphin, which is priced at €35,990 vs. a €39,000 Cupra Born, a BYD Atto 3 at €42,300 against a €46,500 VW ID.4 Pro, a Maxus MIFA 9 MPV for €68,900 vs. Mercedes-Benz EQV at €77,600, a Zeekr 001 at €65,000 vs. a Porsche Taycan at €88,400 – the latter being a whooping 36 per cent advantage to the Chinese car. Clearly, to help the established European manufacturers survive, be competitive and thrive, something needs to be done.

So, if you are thinking of buying a new Chinese-built EV anytime soon, you had better be quick before the prices increase.