Chinese electric-vehicle companies registered a surge in EV sales in the European market, currently the second-largest electric vehicle market on the globe, in June as customers raced to beat the impending tariffs on Chinese EVs. As with the United States, the European Union has taken a somewhat combative stance against new energy vehicles manufactured in China. However, while the U.S. recently passed a 100% import tariff on Chinese electric-vehicle imports, the European Union adopted milder import tariffs.
Even so, these tariffs will cause Chinese electric cars to lose their affordability once they hit European ports, eliminating the crucial factor that makes EVs produced in China more attractive than Western-made electric cars. With the import tariffs of up to 38% kicking in this month, European customers are racing to buy China-made electric cars before the vehicles lose their elusive affordability. As a result, Chinese automakers managed to secure 11% of the European EV market, including in the UK, last month.
Dataforce’s analytic data shows that state-owned Chinese automaker SAIC benefitted the most from the ongoing rush to buy Chinese electric cars. However, the data revealed that around 40% of the imported vehicles were registered to car dealers instead of car buyers, another sign that the market is rushing to purchase Chinese EVs before the tariff kicks in. SAIC sold a little under 13,400 EVs in June compared to BYD’s 4,000 units sold, likely because SAIC EVs will be subject to the full 38% import tariff while BYD has a 17% import tariff levied on all its EU exports.
The tariffs are part of the European Commission’s efforts to prevent Chinese carmakers from undercutting their European counterparts. Several months ago, the commission launched a probe into the deluge of cheap electric cars flooding into Europe from China. The study was to determine if Beijing’s decade-long subsidy program was artificially lowering electric vehicle prices.
Hundreds of billions of dollars in subsidies from the Chinese government have allowed automakers in China to significantly lower their production costs and sell their EVs at much lower price points, giving them a significant advantage in an industry where electric vehicles are often prohibitively expensive. Western carmakers have lowered their EV prices but high production costs mean many of them are operating at a loss even as sales increase.
Europe’s import tariffs on Chinese electric cars are meant to protect the local automotive sector from undue competition. Instead, they will undoubtedly limit access to affordable electric cars. In the meantime, however, both customers and dealers are buying up EVs from China at record rates while they are still cheap.
This surge in sales suggests that the tariffs will have a real impact on future sales of Chinese EVs. That could give other industry actors such as QuantumScape Corp. (NYSE: QS) an opportunity to make inroads into this major market with their products.
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