Europe may need to impose tariffs of up to 55% to curb Chinese EV imports: report

The European Union will need to levy higher-than-expected tariffs of up to 55% on Chinese electric vehicles to curbtheir imports into the bloc, according to a new analysis by Rhodium Group. 

The findings, released Monday, come amid the EU's ongoing anti-subsidy investigation into EV imports from China.  

Rhodium Group, which expects the EU to impose tariffs in the 15% to 30% range on Chinese EVs, said those tariffs were unlikely to be enough to check competition from China. 

"Even if the duties come in at the higher end of this range, some China-based producers will still be able to generate comfortable profit margins on the cars they export to Europe because of the substantial cost advantages they enjoy," the report said. 

Chinese companies such as BYD, which toppled Tesla to become the world's largest EV manufacturer last year, can sell cars at much higher rates and profit margins in regions such as the EU compared with the domestic market, despite paying a 10% tariff rate. Chinese EV makers are locked in an intense price war in their home market.

BYD's Seal U model, which sells for 20,500 euros in China and 42,000 euros in the EU, generates an estimated profit of 1,300 euros in its home market versus 14,300 euros per car in Europe, Rhodium said. Even after 30% in tariffs, a company like BYD will make a higher profit in the EU, it added.

The report said that BYD will likely need to cut prices to meet its goals of gaining more market share in the EU. A 30% tariff rate would still leave enough room to do so.

"Much steeper duties of around 45%, or even 55% for fiercely competitive producers like BYD, would probably be necessary in order to render exports to the European market unappealing on commercial grounds," the report