Chinese EV Makers Confident Their Cost Advantages Will Overcome EU Tariffs

  • Chinese EV makers remain confident that their cost advantages and strong production capabilities will make their cars competitive in the EU despite new tariffs of up to 35.3%. 
  • Leading Chinese automakers, including BYD and Xpeng, are adapting their strategies and exploring investments in Europe to navigate the impact of EU tariffs on imported electric vehicles.

Chinese electric vehicle (EV) manufacturers are undeterred by the European Union’s new tariffs. They are confident that their production advantages and competitive pricing will allow them to thrive in global markets, including Europe.

Speaking at the China International Import Expo (CIIE) in Shanghai, industry leaders from China’s EV sector emphasised that the combination of early development, government support, and unmatched manufacturing capabilities positions them to succeed abroad despite the recent tariff challenges.

Sam Wu, CEO of Ford Motor China, pointed out at the Hongqiao Forum that Chinese carmakers have a decisive edge in EV production that could easily translate to success in other regions. He attributed this to China’s head start in the industry and its supportive government policies.

“The Chinese EV industry is in pole position,” he said, “thanks to an early start and strong governmental backing.”

Last month, the European Union voted to impose additional tariffs on Chinese-made pure-electric cars following an anti-subsidy investigation. These duties, ranging from 17 to 35.3 per cent, are in addition to the EU’s standard 10 per cent tariff on imported EVs.

The new tariffs, set to last for five years, will impact Chinese brands and global manufacturers like Volkswagen and BMW, who assemble cars in China in partnership with local companies such as SAIC Motor and Brilliance Auto.

Chinese EV makers believe their cost advantage will keep their vehicles competitive in the EU despite the added tariffs. According to Stephen Dyer, co-leader of Greater China at global consultancy AlixPartners, Chinese-made electric cars cost about 35 per cent less to produce than those assembled in other markets.

UBS’s teardown report also revealed that BYD, the world’s largest EV producer, has a 25 per cent cost advantage over traditional European brands.

Yin Tongyue, chairman of Chery Automobile, a major Chinese automaker, stressed the importance of global integration for China’s EV industry. “Without access to the best technologies and the global automotive supply chain, we could not have progressed so quickly,” he said.

He emphasised that collaboration with global partners and a focus on sustainability would be essential for Chinese carmakers as they seek to maintain their competitive edge.

Chinese EV manufacturers like Xpeng are already adapting their strategies to the European market. Xpeng’s vice-chairman, Brian Gu, noted that the company is discussing how to navigate the new tariffs with its European dealers. “Europe is a market we value highly,” he said, adding that Xpeng is considering new models, business strategies, and potential investments in Europe to overcome these challenges.

The new tariffs vary by manufacturer. SAIC has the highest tariff rate of 35.3 percent, and Geely, which faces an additional 18.8 percent duty, is among the most brutal hit. Other Chinese carmakers will absorb a 20.7 percent tariff on their vehicles.

Despite the hurdles, Chinese EV companies are determined to continue expanding their presence in Europe and other global markets, backed by their significant manufacturing advantages and competitive pricing.

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