The European Union will make the decision in the coming weeks. Or, at least, he will certify his decision because it seems that the unequivocal sign of it will be to vote in favor of tariffs on Chinese electric cars. That’s what the latest European Parliament vote and math says
However, German manufacturers continue to pressure so that the measure is not taken. Last week it was Volkswagen that made it clear that it was against the application of this type of countervailing duties, ensuring that protectionist measures can make things very complicated for European manufacturers in China.
The information was brought The Confidentialwho pointed out that the Volkswagen Group seriously thought that, if applied, the consequences on European manufacturers in China they are guaranteed. Furthermore, they assure in the digital media that they stressed their doubts in the European internal commissions about the percentage of the, misnamed, tariff that they want to impose.
It must be taken into account that Europe has divided its compensatory duties into different tranches, depending on the aid that the Chinese Government has provided to each manufacturer and the cooperative will of each company. This has caused BYD to face, for the moment, 17.4% tariffs but Volkswagen electric vehicles imported from China face the highest rate (37.6%) for producing them together with SAIC, a Chinese state company that has not collaborated with the European Union.
The decision is also key in the future of the Cupra Tavascan, an electric model that was to be a new boost to electric car sales within the Volkswagen Group and that bears Spanish hallmarks. Countervailing duties that are too high can make anticompetitive this electric model.
Something similar happens to BMW. From 2022, the German company produces its MINI Cooper there together with Great Wall Motors. This company is also another of those that will receive the highest tariffs and consequently its CEO, Oliver Zipse, has been sending messages for some time in which he assures that Europe must reach an agreement with China and assume its new role within the automobile market.
In an open letter last summer, Zipse pointed out that tariffs on electric cars from China “penalize European manufacturers” since the models produced there and then sold in Europe “will not be competitive.”
And he stressed: “Countervating duties also limit the choice of electric cars for European customers and could therefore slow down the adoption of electric vehicles and thereby slow down the decarbonization of the transport sector. Measures always entail countermeasures. Let us not forget that the implementation of the Green Deal in Europe also depends heavily on raw materials and technology particularly from China.”
After the summer pressures, these have increased now that the final vote is approaching. “Tariffs harm companies globally active in this country (on Germany) and could provoke a trade dispute from which no one benefits. Therefore, the German government should take a clear position,” stressed the CEO of BMW.
An identical opinion is maintained by Mercedes. Its CEO, Ola Källenius, has always been against European protectionist measures. “It is better to counteract these practices with commercial stimuli instead of protectionism, especially in the German case with a strong orientation towards exports,” recalled Källenius in words collected by The Energy Newspaper.
Beyond the electric car
If the pressure from German manufacturers is being so strong, it is because everything goes far beyond the electric car. Its sales in China, both for Volkswagen, Mercedes and BMW, are key, representing one in every three vehicles they put on the market.
That is to say, approving tariffs on Chinese electric cars can clamp down on these companies, imprisoning them on both sides, the European and the Asian. Firstly, because the electric models that they bring to Europe will have to be sold at a higher Price and, therefore, will be less competitive than that of Chinese companies that import their vehicles. Especially if we talk about BYD or Geely, whose tariffs are lower than those of companies like SAIC.
China has already threatened to raise tariffs on large-displacement combustion cars and Spanish pork
To this we must add that German manufacturers fear retaliation from the Chinese Government, which could lead to difficulties for the cars they sell in the country. In recent months, China has once again insisted with more economic aid to improve sales of electric cars, which had cooled down, and in this way help local manufacturers who were having a stock build up that they had to give out.
This already makes things complicated for European manufacturers who sell their electric cars more expensively than local companies and who have had problems in recent times to make their vehicles attractive, compared to cars with larger screens and more infotainment systems. advanced.
But, above all, Mercedes, BMW and Volkswagen fear that China will raise taxes on large displacement combustion vehicles. These are a key entry of money into their accounts at the end of the year since the costs for the production of these cars are much lower and in China they can sell them at a very high price because, among other things, they do not have Chinese manufacturers to make them. shadow with this technology.
Much noise and few results
The pressures, however, seem to be of little use. Spain, which had initially supported these protectionist measures, ended up abstaining in the European Parliament and Pedro Sánchez himself, president of the Government, showed himself open to negotiations and a softer stance with the Asian country on one of his visits. diplomatic.
We must not lose sight of the fact that Spain has several things at stake with these new protectionist measures. On the one hand, it is interested in maintaining its relations with China so that its manufacturers see Spanish soil as an attractive space to install their factories. And, secondly, China has already threatened to impose greater trade barriers on key sectors of our country, such as Spanish pork.
Germany is also in a difficult position. The trade volume between the German country and China almost reached 300 billion euros in 2022, if all its industries are added. Finally, he decided to show his rejection in the vote last Friday, October 4.
Furthermore, taking measures that punish local manufacturers will call into question the role they will play on European soil. The Volkswagen Group alone has 119 facilities spread across 19 European countries and has already announced layoffs and is threatening to close new plants if its economic situation does not improve.
The latest proposal from the European Commission will arrive in a very complicated contextwith the European industry on the ropes in the stock market. The fall of the main manufacturers has been a constant in the last week, with investors punishing a downward correction in the profits and cash flow of companies such as Volkswagen, Mercedes or BMW but also of Stellantis2 or Aston Martin.
All in all, it does not seem that the constant pressures from the European industry can end up changing anything. Agencies like Reuters They already report that the decision within Europe has been made. According to their sources, the positions of France, Italy, Poland and Greece are taken and they will continue with tariffs on Chinese electric cars.
This is key because, representing 39% of the total population of the European Union, this quartet of nations would not need more support to carry out the measure. In fact, it would be a denial of it that requires greater consensus. Countervailing duties on these cars will only fall if 15 countries representing at least 65% of the European population reject them. The favorable vote of those mentioned above tips the balance in favor of yes.
And it seems difficult for this to move, at least in the largest countries. France has done everything possible to make Chinese manufacturers pay more for their cars in its arrival in Europe. Renault has hardly any ties with China and Stellantis, which has brands of French and Italian origin, has also done its best to get rid of Chinese dependence.
In fact, this last group could benefit, since with control of Leapmotor’s distribution and production outside of China, it can manufacture cars at a very low cost since their development (and investment, therefore) already has been carried out within the Asian country. At the same time, it is clearing competition from Citroën and Fiat, which have their true possibilities in the low range.
Photo | BMW
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