The European Union initiated a sweeping investigation into Chinese EVs in October 2023, imposing additional tariffs based on automaker compliance levels. BYD and Geely Auto face tariffs of 17% and 18.8%, respectively, while SAIC encounters a steeper 35.3% rate, according to the latest findings.
Industry analysts indicate that Chinese manufacturers retain a substantial cost advantage, which will likely mitigate the tariffs' impact. DIGITIMES Research analyst Jessie Lin noted that the EU's anti-subsidy probe underscores the competitive threat posed by Chinese EVs benefiting from state-backed subsidies. The resulting tariffs—ranging from 17% to 35.3%—seek to level the playing field in a market where a 10% baseline tariff already exists.
The EU, the largest regional market for Chinese EVs, limits its measures to pure EVs, leaving hybrid and plug-in hybrid (PHEV) models untouched. Chinese automakers, adept at producing lower-cost alternatives, can fill demand gaps with these models. Even with tariffs averaging 30% and logistics costs factored in, production efficiencies keep Chinese EV prices competitive—maintaining them at approximately 10% cheaper than European counterparts.
To illustrate, if a European vehicle costs 100%, some Chinese models have production costs as low as 50%. A 30% tariff plus 10% for cost, insurance, and freight (CIF) still results in a final price advantage.
Chinese automakers' edge stems not only from state support but also from platform-based production models that streamline costs. BYD, Geely Auto, and SAIC leverage massive manufacturing scales, giving them an upper hand over European rivals. Additionally, several firms are pursuing localized production in Europe to sidestep tariffs entirely, further enhancing their competitiveness.
Beyond the EU, Chinese EV makers are making notable gains in Southeast Asia. Thailand, a longtime Japanese automotive stronghold, has seen market incursions from BYD, Great Wall Motors, and SAIC. Meanwhile, Chinese EVs are also penetrating Brazil, the world's sixth-largest car market. According to the South China Morning Post, while exports are significant, with over 70,000 Chinese EVs idling at ports, actual sales in the region remain uncertain.
