The EU wants to tax electric cars from China for five years, including Teslas

Brussels confirmed on Tuesday its intention to impose a five-year surcharge on electric cars from China, including Teslas, at a reduced rate, while remaining “open” to a negotiated solution with Beijing.

China subsequently made it known that it “vigorously” opposed these measures, calling on the EU to take “concrete measures” and “appropriate solutions to avoid an escalation of trade frictions”.

Brussels will add to the 10% tax already in place a surcharge of up to 36% on imports of Chinese electric vehicles.

The American manufacturer Tesla, which has its own factories in China, obtained an “individual” rate of 9%, significantly lower due to the lower level of subsidies received by the brand created by the American billionaire Elon Musk, Brussels specified. The main part of the aid provided by Beijing, for the local production of the Model Y and 3, lies in the supply of batteries at a cost below the market, explained a European official.

These customs duties will apply by the end of October for five years, subject to the approval of the 27, divided on the subject. They will replace provisional taxes decided at the beginning of July, and going up to 38%, the Commission specified in a press release.

– Retaliations from Beijing –

While France and Spain actively pushed for proportionate measures, Germany, very involved in China, fought on the contrary, with Sweden and Hungary, to avoid sanctions, fearing reprisals from Beijing.

Berlin is particularly reluctant, due to the weight of its automobile industry in China. Manufacturers Audi, BMW, Mercedes and Volkswagen make nearly 40% of their global sales in China. “The negative effects of this decision outweigh the possible advantages,” Volkswagen deplored in July at the time of the imposition of provisional taxes.

The Chinese Chamber of Commerce in the EU had warned as soon as the European announcement was made of the “negative” consequences on relations between Beijing and Brussels, criticizing disguised “protectionism”.

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China already announced an anti-dumping investigation into imports of European pork in mid-June, after an investigation launched in January into EU wine spirits (including cognac). Wines, dairy products and high-powered cars are also in its sights, according to the Chinese press.

This new war of words is part of the growing trade tensions between the West and China, which is also accused of destroying competition in other sectors: wind turbines, solar panels, batteries…

– 14.6 million employees –

The EU thus hopes to protect an automobile industry that employs 14.6 million employees in the EU while avoiding a deadly conflict with its second economic partner after the United States. The latter had for their part announced customs duties of 100% in mid-May, compared to 25% previously.

Brussels also says it is “open” to any other solution emanating from Beijing, which is in accordance with the rules of the World Trade Organization (WTO), which China also seized in July.

“We consider that it is really up to China to find an alternative” to the surcharges, indicated a European official.

Champion of petrol and diesel engines, the European car industry fears seeing its factories disappear if it fails to stem the predicted flood of Chinese electric models. Beijing has taken the lead by investing in batteries for a long time.

In the EU, the market is booming before the ban in 2035 on sales of new vehicles with combustion engines: Chinese electric vehicles represent 22% of the European market, compared to 3% three years ago, according to industry estimates. Chinese brands occupy 8% of the market share.

The Commission also announced that it would not collect the provisional taxes that came into force on 5 July. They will continue to be paid but will remain blocked in a bank account before being returned.

The new taxes affect most Chinese manufacturers.

Brussels will impose surcharges of 17% on Chinese manufacturer BYD, instead of the 17.4% provided for in the provisional tax decided last month, 19.3% on Geely, against 19.9%, and 36.3% on SAIC against 37.6% in July. Other manufacturers will be subject to an additional average duty of 21.3%, against 20.8% decided in July, if they cooperated with the investigation or 36.3% (37.6%), otherwise.

These changes were decided after a dialogue with the companies concerned and taking into account some of their requests, the European official specified.

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