EU Tariffs Bite as June Data Shows Reduced Chinese EV Exports

Sales data from June has revealed that Chinese electric vehicle exports to the European Union slowed down last month due to the EU’s new import tariffs on EVs manufactured in China. Although the tariffs were first introduced provisionally as EU and Chinese leaders discussed a way forward, it seems they are already impacting the export of Chinese electric cars into the regional bloc.

The China Passenger Car Association (CPCA) reported that despite a 22.3% year-over-year increase, the export of Chinese new energy vehicles (NEVs) dropped by 15.2% in June. This includes plug-in hybrid electric cars as well as battery electric vehicles (BEVs).

With the EU ranking as the second-largest EV market on the globe behind China, losing access to the European market would be a major blow to the more than 200 EV producers in China. The U.S. market was already out of reach for Chinese producers, and they will find it even harder to export their low-cost EVs to the American market now that the Biden administration has approved a 100% import tariff on Chinese electric-vehicle imports.

Fortunately for the hundreds of electric-vehicle manufacturers based in China, industry officials say the sales slowdown in the EU will be temporary. CPCA Secretary General Cui Dongshu explained that temporary pressure caused NEV exports from China to dip. The east Asian economic giant’s export growth also fell to slightly over 10% compared to its previous 30%–40% annual range. This monthly fall in exports and export growth was largely due to the EU’s new provisional tariffs on EV exports from China, Dongshu said.

China’s EV makers have been on quite a roll for the past couple of years, and the top players in the industry are now giving giants such as Tesla a run for their money. BYD even managed to temporarily usurp Tesla’s position as the world’s best-selling electric vehicle manufacturer in late 2023 before the Texas-based EV company reclaimed its position. Chinese EV companies also have an advantage that automakers in other countries don’t: billions of dollars’ worth of subsidies from their home government, disbursed for nigh a decade.

These subsidies have helped EV companies in China cut their production costs significantly and pass the savings to their consumers, allowing them to sell good-quality electric vehicles at affordable prices. As thousands and thousands of these more affordable EVs began streaming into the EU, the regional bloc’s executive arm, the European Commission, launched an investigation into China’s EV subsidy program. The investigation resulted in the EU levying up to 37.6% in import tariffs on Chinese EV imports.

Companies such as Cenntro Electric Group Ltd. (NASDAQ: CENN) that have production facilities in different countries around the world could find themselves at an advantage not just of being close to their target markets but also sidestepping the different tariffs being imposed to curtail imports from countries considered to be dumping their products.

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