Chinese EV Tariffs Causes Upset As BMW, VW And Mercedes-Benz Protest

The European Union’s recent decision to impose tariffs as high as 38% on electric vehicles imported from China has sent ripples through the automotive industry, particularly among German automakers. Mercedes-Benz, BMW, and Volkswagen, who have all found a lucrative market in China, are voicing strong concerns about the potential backlash the tariffs could have on their Chinese operations.

BMW CEO Oliver Zipse did not mince words, stating that the EU’s protectionist measures could trigger a trade war, harming European companies and interests. Mercedes CEO Ola Kallenius echoed these sentiments, emphasizing the need for open trade and cooperation, not barriers. Meanwhile, Volkswagen questioned the timing of the EU’s decision, citing a weak demand for battery-electric vehicles in Europe at this moment.

The EU sees these tariffs as a countermeasure to the hefty subsidies Chinese automakers enjoy. However, the move has drawn criticism from Germany’s VDA industry body, which argues that the tariffs could do more harm than good to the European automotive sector.

The tariffs are not limited to Chinese automakers. Western producers like Tesla, BMW, Volvo, and Renault’s Dacia, who all export their China-built EVs to Europe, will also feel the pinch. This could translate to billions of euros in additional costs for these companies, who are already grappling with slowing demand and falling prices in their domestic markets.

Volvo’s Deputy CEO, Bjorn Annwall, warned that these extra costs will ultimately be passed on to consumers, making EVs more expensive. Volvo, owned by China’s Zhejiang Geely Holding, strongly advocates for free trade and sees these tariffs as an obstacle to that.

While the EU’s decision aims to protect its own EV industry from the influx of lower-cost Chinese models, some economists argue that the immediate impact of the tariffs will be minimal. However, the Kiel Institute for the World Economy predicts that the tariffs could significantly reduce Chinese EV imports, potentially offset by higher production in Europe.

China, for its part, vowed to protect its rights and interests. However, it has not specified any retaliatory actions yet. On the other hand, the Chinese Passenger Car Association seems less concerned, expressing confidence in the continued potential for growth of Chinese EV makers in Europe.

• Also See: VW Doubts The Usefulness Of Import Duties On EVs In China