Chinese electric vehicles are in the sights of Brussels, which has just announced surcharges to curb their surge.
Here are the reasons that pushed the European Union to act, and Beijing’s possible response.
A boom driven by subsidies
Between 2014 and the end of 2022, the Chinese government says it has spent more than 200 billion yuan (25.5 billion euros) on subsidies and tax deductions linked to the purchase of an electric vehicle, enough to boost Chinese manufacturers in the face of to their American competitors, who have benefited less from aid.
They also benefited from increasing domestic demand: 69% of electric vehicles sold worldwide in December were in China, according to research company Rystad Energy.
Exports also surged. According to the American think tank The Atlantic Council, global sales of Chinese electric vehicles increased by 70% in 2023, to 31.6 billion euros.
And nearly 40% of these exports went… to the European Union, which has become the leading buyer of these Chinese vehicles.
BYD, number one in the sector
The undisputed leader in China is BYD. In 2023, it posted a record profit and announced its desire to enter the top five automotive groups in Europe.
In March, it became the first to pass the symbolic mark of seven million vehicles produced (combined hybrid and electric) since its entry into this niche.
According to state media, the other Chinese manufacturers exporting the most electric vehicles to Europe are SAIC, MG Motor and Polestar — owned by Volvo and its Chinese parent company Geely.
Concerns and dissensions in the EU
The increase in exports has allowed Chinese groups to nibble market share in the EU, going from less than 2% of electric cars at the end of 2021 to almost 8% at the end of 2023, according to the Jato institute, specializing in automobiles. .
European imports of Chinese electric vehicles jumped from 57,000 in 2020 to 437,000 in 2023, according to the US Peterson Institute for International Economics.
Brussels is worried about this, denouncing an “unfair subsidy policy” which, according to it, represents “a threat” to European manufacturers.
On Wednesday, the EU therefore announced its intention to add additional customs duties of 17.4% to BYD, 20% to Geely and 38.1% to SAIC, after almost nine months of investigation.
But the measures are not unanimous: Germany, whose manufacturers Audi, BMW, Mercedes and Volkswagen achieve nearly 40% of their global sales in China, has warned of the risk of a “trade war” .
Possible Chinese replicas
On Thursday, China announced that it “reserves the right” to file a complaint with the World Trade Organization (WTO) and promised to “take all necessary measures to resolutely defend the rights and interests of Chinese companies” .
However, she did not reveal any countermeasures.
Beijing announced in January an investigation targeting all wine spirits imported from the European Union, including cognac.
Wine, dairy products, pork and large-engine cars are also in the sights, according to the Chinese state press.
“We reiterate our deepest concern,” Florent Morillon, president of the National Interprofessional Cognac Bureau, declared on Wednesday.
The Chinese “are going to launch retaliation, that’s for sure,” Tu Le, founder of the specialist firm Sino Auto Insights, told AFP, citing “luxury products and French and Italian wines” as possible targets.
“On the other hand, as China’s economy is still not doing well, the answer could be much ado about nothing.”
An impact on sales
Sales of Chinese vehicles will inevitably suffer. According to the German Kiel Institute for the World Economy, a 20% surcharge would mean 125,000 fewer vehicles to the EU, for a volume of more than 3.5 billion euros.
There will be “in the short term a drop” in exports, anticipated Gregor Sebastian, analyst at Rhodium.
“As 40% of Chinese electric vehicle exports went to the EU in 2023-2024, it will be a challenge to redeploy these exports,” he wrote on LinkedIn before the Brussels announcements.