Europe’s electric car tariffs sting China but won’t halt BYD’s advance

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After months of investigation, the European Union has announced additional tariffs on electric vehicles (EV) imported from China, because of what it sees as Beijing’s unfair support for companies that undercut European carmakers.

The decision deals a blow to the Chinese government, which had been lobbying hard against the taxes, and EV producers in the country. Most companies are facing hefty extra tariffs of between 17.4% and 38.1%, on top of the 10% duty already levied by the bloc.

The impact on China’s EV makers will vary depending on the level of tariff and each company’s cost structure. Those hardest hit may be forced to raise prices or set up factories in Europe.

And while Beijing is clearly unhappy, analysts say it’s unlikely to want to rush into a full-blown trade war with its second biggest trading partner, not least because of economic pressures at home.

For market leader BYD, which vies with Tesla as the world’s top producer of battery electric vehicles, there’s still space for it to grow in Europe, even with the additional duty, according to Gregor Sebastian, a senior analyst with the Rhodium Group.

Facing the lowest additional levy of 17.4%, BYD could emerge as a relative “winner,” he said. Duties at this level could even allow BYD to cut its already competitive prices to gain market share in Europe.

“BYD is already building a factory in Europe, is likely to still profitably export to the EU even with 17% duties, and can export plug-in hybrids without additional duties,” Sebastian said. The new tariffs only target battery EVs.

Rhodi