Since delaying decisions until after the European Parliament election, the European Union (EU) has officially announced plans to impose substantial tariffs on Chinese electric vehicles (EVs), potentially reaching up to 38%.

After the European Commission’s ongoing investigation into Chinese subsidies that it describes as a surge of affordable, government-subsidized Chinese EVs flooding the market since October 2023, it has been revealed that from July 4, Chinese EV automakers might face hefty tariffs unless ongoing discussions with Chinese authorities yield a satisfactory resolution.

According to the European Commission, Chinese EV producers who cooperated with the investigation will face an average duty of 21%, while those who did not will be subject to the maximum tariff of 38.1%. Furthermore, the European Commission also applied charges individual tariff charges to three major Chinese companies: BYD at 17.4%, Geely at 20%, and SAIC at 38.1%. Moreover, these tariffs will be in addition to the existing 10% tariff rate on all EVs produced in China. Interestingly, Tesla has requested an individually calculated tariff rate according to the European Commission’s statement.

Notably, the tariffs from the EU follow the United States (U.S.) recent increase of tariffs on Chinese EVs from 25% to 100%, underlining a broader trend of Western economies responding to competitive pressures from competitive and affordable Chinese EVs.

In response to these new tariff rates from China, Lin Jian, a spokesperson for China’s foreign ministry, said at a daily briefing expressing dissatisfaction with the European Commission’s decision stating that China would “take all measures necessary to protect our legitimate rights and interests.”

Within the EU, opinions are mixed. Germany’s Transport Minister Volker Wissing spoke about the situation on X stating, “The European Commission’s punitive tariffs hit German companies and their top products.” As for the European Automobile Manufacturers’ Association (ACEA), it echoed concerns advocating for “free and fair trade” as essential to maintaining the competitiveness of the European automobile industry.

With China selling over 8 million EVs, accounting for around 60% of the global total in 2023, its market dominance in the global EV market has elevated responses to concerns for European automakers. Nevertheless, Chinese automakers including NIO and BYD have aimed to expand their presence in the European market with NIO localizing EV production while BYD aims to be the top EV seller in Europe by 2030. However, these plans could face obstacles with the new tariffs from the European Commission.

As the EU prepares to enforce these tariffs, the automotive landscape is bracing for the impact. With Chinese EVs facing more obstacles along the way in the global market, the outcome of ongoing discussions between the EU and Chinese authorities will determine the future of EV trade between the two.

Want to learn more about EV? Thinking of buying an EV? Head over to EV.com and discover more.

EV.com is the world’s 1st Electric Vehicle (EV) marketplace that aims to promote zero-emission mobility by providing a platform for consumers to learn about, compare, and purchase EVs.