EU Signals Willingness to Continue Talks with China about EV Tariffs

A senior European Union (EU) official has revealed that the European Commission is willing to continue talks with China about electric vehicle import tariffs, even after the EU imposes such tariffs. The commission launched an antisubsidy probe into Chinese EVs several months ago to determine if China’s electric vehicle subsidy program gave its automakers an unfair edge over foreign carmakers.

Although the probe is still ongoing, the EU has already imposed import tariffs of up to 38% on battery electric cars manufactured in China, making it impossible for Chinese companies to sell their EVs at affordable prices in one of the largest electric-vehicle markets in the world. Sources say that the European Commission has now sent a proposal to the 27 EU member states for its final import tariffs on Chinese EVs with a vote set for Friday.

The commission also included an extra text stating that negotiations regarding the Chinese EV subsidy dispute still hadn’t been resolved, but that they would continue with the possibility of a compromise even if EU member states assent to the final import tariff rates. Martin Lucas, director-general in charge of trade defense for the commission, recently told the European Parliament that technical negotiations with China had reached a nearly daily basis and could continue into November.

Lucas said that the conclusion of the EU’s probe into China’s EV subsidies may not signify the end of negotiations with Chinese authorities on how to rectify the matter. He noted that the ongoing probe has separate legal deadlines that cannot be missed with the need for definite measures by Oct. 31, 2024. The possibility of solutions such as price undertakings will remain open even after this deadline passes, he says.

Chinese carmakers had proposed revised tariff offers during negotiations, and although the EU commission did not find them acceptable, Lucas said, there has been some progress in the negotiations. If EU member states accept the commission’s final tariff proposal, the tariffs will range from 7.8% for Chinese-made Teslas to 35.3% for companies such as SAIC, which have been considered uncooperative with the European Commission’s antiprobe investigation.

The impending vote will set the tariffs in place for the next five years unless 65%, or 15, of the EU’s member nations vote against the commission’s proposed tariffs. A second round of voting on Oct. 30, 2024, may be necessary to decide on the final tariffs. China is already dealing with 100% electric vehicle import tariffs in both the United States and Canada, making the North American market virtually inaccessible to Chinese automakers. It could lose access to most of the foreign EV market if the EU market approves the proposed tariffs.

North American EV makers such as ElectraMeccanica Vehicles Corp. Ltd. (NASDAQ: SOLO) will be following the developments in the EU to track how any agreements reached could shape the future of the automobile market.

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