EU Commission’s tariffs could boost EV relocation to Europe

4 months ago 29

Tariffs on China-made electric vehicles (EVs) could boost Chinese carmakers’ efforts to localise production in the EU, Hungary’s Economy Minister Márton Nagy said while signalling widely differing views among member states on whether duties should become permanent.

Speaking after an informal meeting of EU competitiveness ministers in Budapest on Tuesday (9 July), Márton Nagy said the European Commission’s decision to apply provisional duties of up to 37.6% may have speeded up a trend of supply chain relocation.

“It can happen that after the tariffs, this process [of localisation] is accelerating,” Nagy said.

His comment came a day after Chinese EV heavyweight BYD announced that it would build a $1 billion plant in Turkey. The deal followed Ankara’s decision last month to impose a 40% tariff on Chinese vehicles.

Turkey’s Minister of Industry and Technology, Mehmet Fatih Kacir, said that the agreement could help ease the sale of Chinese EVs to the EU due to Turkey’s customs union with the EU.

Nagy, however, also highlighted that Chinese carmakers’ localisation within the bloc had already taken place before the EU executive’s decision.

“Localisation is a process that is going on without the tariffs,” he said, and is typically a means to “shorten the supply chain” for firms “in the most cost-efficient manner”, he added, pointing to the fact that BYD and Chery had both announced plans to build factories in Europe while the EU anti-subsidy probe was still ongoing.

A survey published last month by the China Economic Information Service and the China Chamber of Commerce to the EU found that increasing localisation “remains a long-term strategic goal” for Chinese businesses, despite their enthusiasm for EU investments being “dampened” by the EV saga.

Meanwhile, Nagy also emphasised that EU ministers hold “opposite views” regarding the tariffs, with some member states heavily in favour and others vehemently opposed.

After the Commission confirmed that preliminary duties applied from 5 July, the bloc’s 27 countries are expected to hold an initial non-binding vote on the issue next week and only lay out their final stance in November. If a qualifying majority of at least 15 countries representing at least 65% of the total EU population opposes the measures, the Commission should withdraw them.

Germany has been the most vocal critic of imposing new tariffs on China-produced EVs and has pushed for a negotiated agreement to ward off definitive duties.

[Edited by Anna Brunetti/Alice Taylor]