Europe Votes to Slap China-Made EVs With Tariffs—but Tesla Gets Off Easy
Just one week after America’s 100 percent tariffs on China EVs kicked in, the European Union has voted to officially approve additional tariffs for electric vehicles imported from China, making it harder for Chinese automakers to compete in the European market.
The tariffs were proposed by the European Commission in June after it concluded that Chinese-made EVs have received significant government subsidies that create an unfair advantage. Electric vehicles made in China—both by Chinese brands and by Western ones like Tesla and BMW—will be subject to varying levels of import duties between 7.8 and 35.3 percent.
Out of 27 member states of the EU, 10 voted yes to the proposed tariff, 5 voted no, and 12 abstained. Germany is the most prominent country to vote against the tariff, having been publicly lobbied by German carmakers like Mercedes, BMW, and Volkswagen to do so. The result represents a small change to the unofficial vote that took place back in July, when 12 countries voted yes and 4 voted no. But the difference is far from enough to reverse the result.
To directly approve or block the suggested tariffs, any side needed to amass support from 15 EU countries that represent more than 65 percent of the European population. That could’ve been met only if larger countries such as Italy, Poland, or the Netherlands had joined the opposition. On Friday, neither side reached the 65 percent threshold, so it’ll be up to the European Commission to uphold its tariff proposal.
In 2023, EVs made in China accounted for 19 percent of the European EV market. The number is still growing fast, potentially reaching 25 percent by the end of this year—and more Chinese brands are poised to join the competition.
By selling decent-quality cars at a more affordable price, these Chinese automakers have become a significant challenger to Europe’s homegrown auto industry, which has been an important economic pillar to the region. In Germany for example, the auto industry accounted for nearly a quarter of total domestic industry revenue in 2022.
The tariffs will take effect starting October 31 and will last five years, likely resulting in a price hike for Chinese-made EVs in Europe and making them less appealing to carbuyers. But it won’t erase their price advantage completely, especially for brands such as BYD. Research by the Rhodium Group suggests that tariffs need to be in the 40 to 50 percent range to properly deter Chinese brands from coming to the European market.
But European tariffs are likely not the end of the story. “In parallel, the EU and China continue to work hard to explore an alternative solution that would have to be fully WTO-compatible, adequate in addressing the injurious subsidization established by the Commission’s investigation, monitorable and enforceable,” says a statement from the European Commission on Friday. If a deal is reached in the future, it could lead the EU to revise or scrap the tariffs.
Different Impacts for Different Brands
In general, the new tariffs are designed to make it harder for Chinese-made EVs to maintain competitive prices in the European market. However, different carmakers are getting different tariffs depending on how much they cooperated with the antisubsidy investigation, and whether they are joint ventures with European companies.
Currently, all imported cars are already subject to a 10 percent tariff. For BYD, the best-selling plug-in EV brand in the world today, an additional 17 percent tariff under the new requirement is unpleasant, but probably bearable. However, an additional 35.3 percent tariff for SAIC (which has a joint venture with General Motors) and other Chinese brands that didn’t cooperate with the investigation is a much bigger problem.
