In September 2023, European Commission President Ursula von der Leyen announced that the EU is launching an investigation into the privileged position of electric vehicles produced in China due to subsidies. The investigation showed that the Chinese government subsidized cars exported to Europe in various ways, and in response the EU is considering the introduction of additional tariffs.

For a long time, Europe was looking for a way to protect domestic producers. Some suggested joining forces against the Chinese, such as the head of the Renault Group, Luca de Meo. It seems that the temporary decision on additional tariffs is the EU’s first move to protect domestic producers.

According to Automotive News Europe, the temporary tariff rates would apply from July, and European importers must report imports of Chinese electric vehicles through customs registrations. This means that retroactive customs clearance is inevitable.

The investigation also showed that imports from China increased by 14 percent (177,839 vehicles) compared to 2022, and if it continues, it is not doubtful that it could negatively affect employment and overall production. The Chinese Chamber of Commerce in the EU said it was disappointed by the decision and that the increase in imports was a reflection of the growing demand for electric vehicles.

Manufacturers are trying to resist the increasingly rapid Chinese conquest of the European market, and one of the ways is to continue producing cars with internal combustion engines. In February, Luca de Meo stated that Europe is facing major challenges and that the alienation and disorientation of the European automotive industry will lead to a structural trade deficit for Europe. He also warns that the phase-out of internal combustion engines, which is planned for 2035, could mean a decrease in the competitiveness of the European car industry. According to him, ICEs have been a protective barrier for Europeans for years, and now with the development of electric cars and the increased need for batteries, that protection is disappearing because the Chinese control 75 percent of global battery production.

Mercedes and Škoda have already announced that they will not give up ICE as long as there is demand. Other companies are expected to follow this path as well.

Source: Automotive News Europe