EU 동향

 

 

China has one of the fastest growing EV markets in the world, accounting for approximately 60% of all new electric cars sold worldwide, according to International Energy Agency. In particular, companies like BYD, NIO, and Xpeng already hold significant market share not only in Asia but also in Europe. According to TrendForce’s February 2024 report, BYD accounted for 17%, GAC Aion accounted for 5.2%, and SAIC-GM-Wuling accounted for 4.9% of global market share, with Tesla remaining at the top and Volkswagen at the fifth spot with 4.6%.[3] Furthermore, Union Bank of Switzerland forecasted that EU is to become China’s biggest automotive export destinations by 2030, which underlines the degree of significance the new levies will have on the 27 members of the EU, home to 450 million people. This contrasts with the impact the quadrupling of tariffs by the White House last month will have in the United States, wherein the impact is likely to be minimal since few Chinese-produced EVs are sold. On the other hand, the EU’s new levies are likely to inflict some pain as not only has the bloc been considered a major destination for the Chinese EVs for a long time, but the Chinese market is one of the biggest consumers of German combustion EVs. The latter was mainly possible due to lower tax rates, grants, easier access to capital, and reduced competitive prices for lithium batteries within the Chinese market. As such, the decline of Chinese government perks would make it harder for European automakers to continue to take advantage of one of their key markets.[4]

 

EU’s extra levies are the result of the two parties (China and EU) failing to reach an agreement regarding the competitive pricing strategy enabled via the Chinese government subsidies to promote clean energy technologies. While China’s such action can be justified due to overcrowding and price war that had been plaguing Chinese EV industry, this could negatively affect European EV manufacturers, who have already seen demand back home flagging due to their higher prices and the allure of cheaper Chinese EVs. Worse, retaliatory tariffs from China may prevent European countries, that export many medium to large-sized automobiles to China, from enjoying current cost-effective benefits.[5] It has also been pointed out that tariffs on EVs would be likely to further hinder the EU’s environmental efforts and net-zero goals because less people are likely to buy EVs at all, with Chinese EVs no longer affordable and the increasing cost of living.[2]

 

State support for Chinese EV industry has surmounted to concerning levels of imbalances, leading to artificially cheap products and unemployment. Chinese commerce ministry, however, considers EU’s protectionist action as something that is “escalating trade frictions and instigating a ‘trade war.’” Contradictory from its original pursuit for a “mutually acceptable solution” to the dispute, China is considering French cognac and pork imports over subsidies, raising the prospect of tit-for-tat measures.[1] Amid rising tensions in the EU-China trade war, European companies might need to alter their business models, particularly if they are compelled to find alternative locations for their production facilities.[2] In fact, some global automakers have already been forced to restructure their operations or cease activities. In October, Mitsubishi Motors declared it would halt production at its joint venture in China. Additionally, Honda, Hyundai, and Ford have undertaken measures such as layoffs and selling factories to reduce costs, as reported in stock exchange filings and state media reports.[6]