EU divided on EV tariffs which experts say will have 'limited impact'

Chinese electric vehicle sales continue to grow worldwide, with flagship carmaker BYD making and selling more EVs than any other company in 2023.‌

Strong growth continues in Europe too – despite provisional tariffs being imposed on Chinese manufacturers. The EU says Chinese car makers benefit from unfair state subsidies, something that China denies.

‌Experts, however, say that these sanctions are just a speed bump for China's EV innovators. When CGTN spoke to Daniel Gros, director of the Centre for European Policy Studies, at the Shanghai Bund Summit he explained the differing views among the European states on the issue:  "The German government is not in favor of these tariffs."

Gros told CGTN's Xu Yi that Germany doesn't agree with the tariffs, that the German car industry leaders think they can catch up with China's electric car makers.

‌"It's more the French and Italian producers who are afraid that their small cars cannot compete with Chinese small cars," he said. "That's why they're pushing to have these tariffs, and they have enough votes in the European Council to have these tariffs confirmed."

‌However, Gros remains skeptical about the effectiveness of the tariffs: "I think the impact will be limited," he said. "The cost advantage of the Chinese producers is so large that probably they can absorb them."

The tariffs by numbers‌

At first glance, tariffs of between 17.4 percent and 38.1 percent sound heavy as they come on top of the 10 percent duty already levied by the EU bloc.‌

But the range of tariffs will depend on each company's cost structure – and some of the hardest-hit may have to raise prices or set up factories in Europe.

‌In May, Chery announced a $500 million investment in Barcelona to build EVs, thus avoiding tariffs, and BYD is set to build another in Hungary, officials saying construction work could begin in 2025.

‌But the devil in the detail appears to show that big companies like BYD for example will likely end up with tariffs around the 17 percent mark, a far cry from the 100 percent sanctions in the U.S. and Canada.

When you consider that BYD's profits are 45 percent higher than they are in China (Rhodium Group numbers), they could potentially still export to Europe profitably.

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BYD sales up 1,000% in Spain

‌Meanwhile on the ground, European consumers are still buying Chinese EVs in record numbers.

When BYD's Explorer No.1 - a roll-on, roll-off cargo ship giant that can carry 7,000 cars at a time - docked in Santander in Spain for the first time on August 14, it delivered a thousand brand new BYD Seal U cars, and every single one was sold within weeks.

‌BYD Spain says business is booming and sales are up a thousand percent year-on-year.

‌"We started only 17 months ago with two dealers, today we have 30 dealers and before the end of 2024 we will have more than 40," BYD Spain's marketing manager Iñigo Trasmonte Garcia tells CGTN. "Our sales strategy is aggressive and we're expecting to have much better results before the end of the year."

A big presence at the Euro 2024 football tournament appears to have paid dividends with page impressions off the charts and a big jump in brand awareness. UK-based online car sales platform Carwow reported a dramatic increase in consumer awareness of BYD following Euro 2024.

‌In a recent survey, Carwow found that 46 percent of respondents said they had heard of BYD, compared to 28 percent before the tournament - the highest level of awareness for all Chinese brands included in the survey.

‌On a Friday night at one of BYD's busy Madrid dealerships, browsing customers are much more interested in value for money than global trade disputes.

Raul Alonso is a university lecturer and is looking at a BYD Dolphin with his daughter, "I'm a very practical person and in the end I'm only interested in the final price the dealer can offer me," he says.

Lawyer ‌Iñigo Ibarra has just been impressed by a test-drive of the BYD Seal U: "It's very smooth, very quiet," he says. "Yes, I'm convinced, it's time to talk numbers now!"

‌The numbers will eventually tell the story. Whether or not some governments try to put on the brakes, it seems sales of Chinese EVs will continue to accelerate in Europe.

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