Thursday, July 25, 2024

European Union joins US economic war against Chinese electric vehicles

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The European Union has decided to join the US-inspired trade war against Chinese exports of electrical vehicles (EVs) despite deep divisions within its own ranks with the opposition led by Germany.

Geely Auto Group unveils the Galaxy Starship a new technology flagship AI-driven SUV prototype at Auto China 2024 in Beijing, April 25, 2024 [AP Photo/Ng Han Guan]

The imposition of the tariffs, which could go as high as 48 percent in some cases, was announced in a lengthy European Commission report, which was initiated in September of last year.

It notified carmakers on Wednesday that it will apply duties of an additional 17 to 38 percent on top of the existing 10 percent tariff which is imposed on all Chinese EVs from July 4, unless in the unlikely event that some agreement to limit exports is reached before then.

The duty varies according to each company and whether it is deemed to have co-operated with the EU Commission. But two of the major companies BYD, the world’s largest EV manufacturer and Geely, which owns the Swedish company Volvo, are set to be hit by tariffs of between 17 and 20 percent.

The commission said that Telsa, which has factories in China, may receive an individually calculated rate.

The opposition has been led by Germany because of the close involvement of German companies in the Chinese market both as a buyer for their products, a base for manufacturing and as a source of component parts. It fears that Chinese retaliation is going to have significant adverse effects.

The Germany auto industry, one of the largest in the world, forms the backbone of the German manufacturing industry.

According to EU officials, in the lead up to the decision German chancellor Olaf Scholz put pressure on European Commission president Ursula von der Leyen to drop the investigation but to no avail.

As the decision was being prepared, he came out publicly against the move saying that “isolation and illegal customs barriers… ultimately just makes everything more expensive, and everyone poorer.”

The German company Volkswagen is one of the most heavily involved in China. According to a report in the Wall Street Journal it has an EV factory in Hefei in which more than a thousand robots are involved in the manufacture of an all-electric SUV, which it intends to export to Europe. VW officials say it is one of the company’s most efficient in the world, drastically reducing the time taken from design to mass-market production.

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