The EU will impose additional tariffs of 17.4% to 38.1% on electric cars produced in China, the European Commission announced on Wednesday (12 June), as preliminary results from its anti-subsidy investigation confirmed prices are being distorted by Chinese state support.
The value chain of Chinese electric cars “benefits from unfair subsidisation, which is causing a threat of economic injury to EU battery electric vehicles producers,” EU Commission Vice-President Margaritis Schinas said on Wednesday (12 June).
“When our partners breach the rules, we will assert our rights,” Executive Vice-President Valdis Dombrovskis said in a statement.
“Today we have reached a milestone in our anti-subsidy investigation,” he said, adding that “this is based on clear evidence of our extensive investigation and in full respect of WTO rules.”
Duties will differ per carmaker, with Chinese state-owned manufacturer SAIC facing the highest duty at 38.1%, Chinese Geely to face 20% and BYD 17.4%.
so:
- car dealers don’t want to sell EVs, you need to push them otherwise they’ll try to sell an ICE model
- car makers have collectively decided that EV = luxury vehicle that must be sold at least for 45k
- car makers don’t really want to make EVs - when the government they introduce a tax subsidy, they increase the price by that exact amount (VW Up for example, they decided that it could be never to sold 5k over the ICE model - when the government increased the subsidy, VW increased the price, and when the subsidy rose to 13k they discontinued the model as it would cannibalize sales of other models)
- charge point operators just want to get the european funds to install chargers, but then they’re going to neglect any kind of maintenance, to the point that for enelx fast chargers it’s the norm to find them broken or out of service and the exception when they work as intended.
- charge point operators also don’t really want to sell electricity, so they set a 2000% markup. Paying electricity for 1 euro per kwh it’s like paying gas at 3 euro per liter
- charge point operators have collectively decided that in order to pay for the charge, customers must use the most user-unfriendly process as possible. Can’t just accept credit card at the POS with lower fees, no, must register on the proprietary app, search for the charger on the map that almost always requires google play services, find it, guess which of the 8 pins on the map is the right one, hope that unlocks, and so on.
it’s almost a miracle that you can see people driving an EV in italy
The point with EVs being over 45k is mostly the extremely pricey battery, China just subsidized until their cars are at a better price, the EU wants to protect European car manufacturers, that’s that.
Battery prices are now close to $100 per kWh and are predicted to keep dropping.
https://www.goldmansachs.com/intelligence/pages/electric-vehicle-battery-prices-falling.html
That’s $7k for the 60-70kWh battery we see in lots of cars. That’s offset against an engine that has multiple hundreds of moving parts, also worth several thousand.
An engine is not thousands of dollars. They mass produce them and so the incremental cost for each one is less than $100 each. There is a lot of engineering costs in an engine, and the cost to setup mass production is high, but that is amortized over all the cars they put that engine in. (there is a reason auto maters only have a few engines that they put in everything)
A battery is $7000, but the raw materials and labor to make it are a large part of that price (I don’t have insight on what the price is) Of course auto makers know they need a lot of batteries and so are working on automation to bring the per battery cost down.
An engine would scrap for more than $100 you’ll have to cite that figure to make it believable.
Last I checked the whole car scrapped for $250, and there is a lot more metal in the rest of the car (transmission, drive train…) than the engine.
Engines are worth more than $100 if they are rebuild-able. However the incremental cost to the automaker is less than $100. Remember, incremental cost does not include the cost of engineering, setting up the assembly line, or profit margin (which are all very expensive and raise the actual cost) - just the raw materials and labor to run the line.
No citations and more outlandish claims. So I’ll put a little math here. From the first google results aluminum scraps around $0.44/lb and a smaller engine block is about 300lb which comes out to $132, not including heads manifolds, pistons etc.
Lmao if you can build a reliable car engine for $100 I’ll give you a billion dollars for a car startup that will outcompete everyone else.
You fail to understand the difference between incremental costs and full costs. A modern car engine can be under $100 each for materials and assembly labor. However that does not count the costs of engineering, or building the assembly line, much less profit margin. Those costs are much higher in an EV.
The engine has hundreds of parts but really only a couple of them are moving. That’s the beauty of electric motors.
They’re comparing against the price of an ICE engine and the fact that they don’t contain one to offset the cost.
But they do have an expensive electric motor instead of the ICE, plus an expensive battery.
Electric motors are substantially cheaper (and simpler, and lighter) than internal combustion. Hell, the typical ICE has two electric motors already in it! (starter, alternator)
Electric motors are substantially cheaper (and simpler, and lighter) than internal combustion
Not really. There is a lot of metal - wires - in the electric motor. Retail prices on motors is a lot higher than the retail price on an ICE. https://www.grainger.com/product/WEG-IEEE-841-Motor-250-HP-15G092 is a 250 horse power motor for $30k. https://www.jegs.com/i/Chevrolet-Performance/809/19435110/10002/-1 is a 500 horsepower ICE (I think this is new, but the site also sells rebuilt engines) for $7k.
Of course with motors there are a number of different ways to built them at different costs. However they are not cheaper than an ICE and we shouldn’t expect that they would be as there is a lot of metal in a motor.
the typical ICE has two electric motors already in it! (starter, alternator)
Sure, but they are small, neither one is capable of moving your car down the road at full speed (the starter might do it for 10 seconds but then it will overheat)
“Subsidized until their cars are at a better price”
What do you think subsidies are? Do you think China is paying $10k for each export sale? Do you think China is just hemorrhaging money so that they can bump sales numbers up?
China dumped billions of dollars into a domestic fast charging network that aggressively stimulated domestic demand and dumped billions of dollars into clean energy initiatives to make sure that electricity prices hover around 1RMB/kWh ($0.14/kWh). How much is electricity in Europe? How much is it in the US?
China offered $1750 in purchase-side tax incentives that have since been phased out. How much are the American purchase-side tax incentives passed by the IRA? Are they still ongoing?
Shanghai gave Tesla hundreds of millions in low-interest loans to set up a factory in Shanghai as opposed to, say, Jiangsu, in exchange for billions of dollars in investment. How much did Tesla’s Nevada Gigafactory receive in subsidies?
Plus, let’s take a look at who’s actually exporting cars to Europe:
MG (SAIC), Volvo (Geely), Tesla, and European joint ventures (BMW, Renault, Volkswagen, etc.)
China has been subsidizing the infrastructure for EVs, absolutely, but subsidizing infrastructure is not illegal. If Europe wants to protect its domestic car manufacturers, the first thing it should look at is Tesla. There’s also a reason BMW, Volkswagen, and Mercedes oppose tariffs: these risk retaliation against their currently rather unfettered access to the highly profitable, rapidly growing premium car market in China. They’re seeing upwards of 10% YoY growth in their luxury car lineups.
The EU Commission is stabbing itself in the chest to save its face. von der Leyen is pursuing a personal vendetta against the best interests of German automakers, completely forgetting the fact that while 10% of Chinese car production is exported, about 70% of German car production is exported. Meanwhile, while Chinese cars predominantly target the lower end of the market, German cars for export are overwhelmingly premium and luxury vehicles. Just an insane policy that seems to be more political pandering than anything else.
Oh thank goodness, the fossil fuel industry is preserved just a little while longer!
I think that there was just no good choice in this matter. I mean, look at how great it turned out for Europe to bond together with Russia over cheap gas. I know that cheap gas and electric cars are not the same thing, by far, but still, if we got dumped by electric cars in China, we’d be wide open for economic attacks like it happened just a few years ago.
That said, I’d love if we compensated for this by finally shifting subsidies from flights to rail, or by shifting from 100LL to 100UL in general aviation, or cracking down on ships using bunker fuel.
Or put the screws on BMW and VW to pull their heads out their asses and start being competitive.
If this tariff went along with a law saying that all European cars had to be electric by a certain date, I’d feel like this was anything but just preserving Europe’s fossil fuel interests.
I mean there kind of is. As is stands, selling cars that emit CO2 will no longer be allowed after 2035. You could argue that that’s far too late, and I would agree, but there is a date and since car manufacturers usually plan ahead (I hope), there probably won’t be many fossil fuel-powered cars by then. It is, however, not strictly limited to electric cars. It just is not allowed to emit CO2.
Okay, fair. I was not aware of that.
Thank you!
Just adding: Wikipedia has a nice article including a map showing the current status of when countries plan to phase out fossil fuel vehicles. It also has a section on which manufacturers have pledged to do so.
https://en.m.wikipedia.org/wiki/Phase-out_of_fossil_fuel_vehicles
Long term politics seem to be a really good strategy for this. Notice how USA is marked as green, even if its only some states who have agreed to do so, and some countries are just grey. However, this is fine, because the manufacturers will still need to make the switch long beforehand in order to keep selling vehicles worldwide.
Tariffs are the most straightforward way to deal with dumping. Hard to fault the EU for this approach.
“Dumped”?
The fuck do you think China is doing? Donating EVs to charity?
Selling EVs below the profitable rate to corner a market and destroy competition. You know, the economic term “dumping”.
Below the profitable rate? Last I checked, Chinese EV manufacturers were either making money hand over fist or getting BTFO’s of the market by those that could.
Good for them. The point is not that they are doing “bad things”. “Dumping” is not a curse word, it’s an economic strategy, one that’s practised by a whole bunch of companies, and not just Chinese ones. When Auchan is selling watermelons at a rate where they barely make any money over a single sale - but make a ton of money on other stuff you get while shopping for watermelons, it destroys farmer’s markets, for example.
All I’m saying is that the choice before the EU leadership was either letting Chinese EVs into the market and risk getting into a position where Chinese companies - and by extension the Chinese government - can pull the levers on the EU car market, in exchange for us getting to buy cheaper EVs right now.
The EU - and you can fill in the blank whether they did it because they wanted to protect EU carmakers’ business, or they wanted to prevent another situation similar to the one with Russian gas - decided that the risk is not worth it. My guess is that some voted as they did because of the former, others because of the latter. That said, you can’t really say that the EU would be “crooked” for either of these things, as fighting for the EU car industry against other countries’ car industries is well within their mandate, as is protecting the EU’s strategic political autonomy.
It’s just how things are, like with the great firewall. If someone wants to sell software services to China, they have to conform to their standards. You can say it’s good or bad, but that’s just how things work. As a European, I don’t care about this specific issue either way, we should be buying fewer cars, electric or otherwise. People who live in places in the EU where you need cars because there’s no good public transport also tend to be living in places where you can’t afford to buy new anyway, not even at BYD prices.
I agree, dumping is well-defined. Here’s the problem, though:
Chinese EV manufacturers are selling their cars domestically for far less than they are in Europe. They’re already price-gouging their European customers. Moreover, only something like 10% of Chinese car production is made for export, and much of that is by European/American brands that are only producing in China because of the cost advantage. This is compared to 70% or more in the case of Germany and Japan.
There’s a far stronger case for overcapacity and dumping from Germany and Japan than there is for China. It’s an absurd bending of WTO rules to align with, as you said, protecting EU carmakers.
It’s protectionist policy, and that’s fine, but it should be clear to everyone that dumping and overcapacity are bullshit justifications for it. I absolutely agree with you that it should be a part of the EU mandate to protect EU workers and EU businesses. I don’t disagree with the tariff, I just don’t like the justification being given for it.
Electric cars will not solve climate change, public transport even if it wasn’t fully electric could…but nobody seems to give a shit about that :/
No one said it would solve it. Using ICE cars will make it worse.
I’ll tell this story in three parts:
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Tesla’s US subsidies
-
China’s EV exports
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China’s “overcapacity”
Part 1.Tesla’s US subsidies. Under the US’ Inflation Reduction Act, purchases of new EVs made in the USA were given a tax incentive of $7500. Previously, states such as California has other incentives such as the $7500 incentive under CVRP. How much in subsidies has Tesla received from tax credits alone under the IRA in 2023, ignoring state-level benefits and carryover from pre-2023 benefits? 654000 sales, for a total of almost $5 billion dollars in purchase-side government subsidies. For 2023. We also know that Tesla has received billions in state-level government funding to set up factories in California, and billions more in government funding for their other various efforts. In comparison between 2009 and 2022, China handed out about $28 billion in EV subsidies, much of that at the state-level to encourage companies to set up factories. In fact, Tesla received huge subsidies to set up it’s factories in Shanghai. By the end of 2022, China had phased out most purchase-side subsidies (except some lingering programs that are not set for renewal). Note that the maximum purchase-side subsidy was about $1750. China’s most significant subsidy today is in it’s expansion of the domestic charging network: China makes up 68% of the world’s charging stations, with a huge number of them being fast chargers. Much of that expansion came out of government coffers and is a huge driver for EV adoption in China.
Part 2. China’s EV exports. In 2022, China’s EV exports were as follows, sorted by volume:
270k - Tesla
140k - SAIC (mostly under the British brand MG)
72k - European joint ventures
55k - BYD
(others)
So, let’s be more clear about what the EU means: they don’t like that foreign companies (including European ones, but mostly Tesla, and almost all European/American brands) are setting up shop in China to produce cars for export.
Part 3. China’s “overcapacity”. It’s no secret that China has pitiful O&G reserves. Oil, notably, is needed for ICE vehicles, but not for EVs. That is, the switch to EVs is a matter of national security for China as it reduces Chinese reliance on foreign oil supplies. Indeed, a huge proportion of Chinese EV production is going to the domestic market, and exports make up only about 10% of total sales (for reference, this number is more like 70% for Toyota).
To sum it up: unlike Toyota/Japan (and others), China is consuming the vast majority of its production. Meanwhile, a huge number of it’s exports are from foreign companies. It’s most notable exporter is Tesla, which is notable for having received $5 billion in purchase-side tax incentives in 2023 in the US… Alone. This is compared to $28 billion between 2009 and 2022, most of which have been phased out, and for which a big proportion was to encourage setting up factories in specific provinces or to build out a domestic charging network.
Edit: to clarify, China does have more car factories than they know what to do with. This is because ICE companies are getting fucked by EV companies. All those factories dedicated to producing ICE cars? Fucked. Idling. Useless. Sales of all cars in China: Volkswagen (-0.2% YoY), Toyota (-3.8% YoY), Honda (-12.3% YoY), Nissan (-14.3% YoY). The only foreign brands that are staying alive in China are EV brands like Tesla (+20% YoY) and luxury cars like BMW (+7.8% YoY) and Audi (+11.3% YoY). These idling ICE factories are currently being closed by the government and the government is limiting licenses handed out for new factories.
Ironically, Tesla is a large part of the reason why Chinese EVs are so cheap because they started the price war… They just couldn’t win it.
America could have held on to the EV market if they kept Tesla in America but instead Elon took it for a gander and outsourced all production to China.
Fremont factory, Nevada Gigafactory, Texas Gigafactory, Berlin Gigafactory…
Gee, Tesla sure outsourced all production to China.
-
Just for the record: Some cars from BMW, Dacia, Renault and Tesla are also imported from China and will get a 21% tariff as well. Probably lots of other brands as well.
It will be interesting to see if they will attempt to pull production back home.
VW seems to have an advantage by already going into fully domestic production, but they still need to prove that they can match the pricing.
It doesn’t help that they’re getting absolutely eaten out of the Chinese ICE market. It’s a rough time to be an ICE car manufacturer.
I think they would need far steeper tariffs to get manufacturing to move out of China
These are in addition to the existing 10% car tariff.
Also keep in mind that there are large car registration taxes and VAT in Europe. While this applies to all cars imported or not, it does increase the difference in net price.
Hey it could be worse
It could be a 100% tax like the USA
Could also be roads full of boat sized junk from Ford, GM, and Chrysler.
China subsidies vehicles, say €5000
EU tariffs vehicles, say €5000
Every vehicle purchase basically comes with €5000 from the Chinese government for the EU government
The CCP doesn’t want you to know this one simple trick
BYD+18% or a too expensive European car, I know what I’ll get. Anyway, we don’t have cars fully “made in France” here, car makers should be ashamed of themselves as they mostly rely on those taxes to prevent competition.
Boy oh boy, is that ever not enough if they want to stop Chinese EVS. They’ll need a 200% tariff just to compete with Chinese EV prices.
And those Chinese EVS are exceeding European/American Auto safety standards.
$9700, $11,000, $15,000 USD for a new car
https://electrek.co/2024/03/06/byd-launches-cheaper-seagull-ev-9700-price/
Shut the fuck up about China having closer ties with Russia then.
This is such bullshit. The EU is supposed to be encouraging EV adoption. There’s a market NOW for affordable EVs it will take years for European car companies to get into. The EU needs to help these companies produce affordable EVs faster, not block Chinese companies from providing a solution in the meantime. Climate change is already a crisis. We need to be doing everything possible to reduce its escalating effects.
