German Carmakers Against EU Tariffs On China-made EVs, Says Move Can Backfire

Leading German carmakers Volkswagen, Mercedes-Benz, and BMW have all expressed concerns about the EU's plans to impose tariffs on China-made EV is the European market.

Leading German automakers BMW, Mercedes-Benz, and Volkswagen have all expressed concern against the investigation conducted by the European Union (EU) on whether import taxes on Chinese electric vehicles (EVs) should be implemented for the benefit of said European carmakers. 

China has provided substantial subsidies to domestic manufacturers of EVs and their batteries to encourage the expansion of its car manufacturing sector. The high success of this has also allowed China’s own homegrown automakers to churn out more cars themselves. In turn, this prompted them to enter the EU marketspace too, and in high volumes and low prices.

China is a crucial market to all three brands in terms of sales and manufacturing.

This has caused concerns that they would undercut European automakers and offer cars at unbeatable prices. In fact,  European Commission President Ursula von der Leyen urged the EU to take steps and prevent Chinese firms from flooding the bloc's market with subsidised electric vehicles.

Although the EU’s proposed tariffs are aimed at benefiting native European automakers, much of the latter says the move will do them more harm than good. In fact, BMW Group 0CEO Oliver Zipse warns that imposing import taxes on models like the iX3 and Mini EV - both made in China - may jeopardise the German automaker's competitive edge. 

BMW, like its German rivals, is heavily reliant on revenues from its Chinese business, accounting for nearly 32% of sales in the first quarter (Q1) of this year.

BMW i5 EV saloons rolling off the line at the group's Chinese plant.

Ola Kaellenius, CEO of Mercedes-Benz, concurred with rivalling counterpart Zipse and reiterated earlier this week his opposition to trade restrictions with China. Volkswagen, which also heavily relies on China for both sales and production, warned that potential duties carried a certain risk. 

Chinese automakers, including BYD, as well as SAIC's MG, are targeting Europe with competitively priced EVs, putting pressure on mass-market manufacturers.  As a result, the European Commission (EC) started customs registration of Chinese EV imports in March this year, meaning they could be hit by tariffs if the trade investigation deduces these brands and products receiving unfair subsidies. 

The probe is due to conclude later this year by Nov, but the EU could impose provisional duties on China-made EVs entering the EU as early as July. KR

Source: Automotive News Europe