The European Union's temporary tariffs on Chinese electric vehicles, introduced in early July, have triggered a sharp decline in registrations across the continent. SAIC Motor's MG, the top Chinese import brand, saw its European registrations plummet nearly 40% in July, following a 60% drop in June, according to data from JATO Dynamics.
The tariffs, aimed at ensuring fair competition, have left European automakers in a tougher spot than their Chinese rivals, supply chain insiders say. The looming threat of Chinese retaliation—potentially targeting European gasoline cars—has added to their concerns.
Even more troubling for European automakers is that vehicles produced in China and exported back to Europe are also subject to the EU's tariffs. These companies face higher levies compared to competitors like BYD and Tesla, further eroding their market edge.
SAIC Motor faces the steepest tariff, with an additional 38% tacked onto the existing 10% rate. In contrast, Tesla's tariff was cut to 9%, BYD's to 17%, and Geely's to 19.3%.
European automakers are feeling the pinch. German brands with joint ventures in China, such as BMW's partnership with Brilliance Auto and Volkswagen's with JAC Motors, face tariffs 4% higher than BYD, reaching 21.3%. Volkswagen voiced frustration, saying the tariffs would undermine the price competitiveness of European vehicles, and called on EU member states to overturn the measures.
The EU defended its decision, saying the tariffs are based on established rules and evidence. During the initial phase of implementation, joint ventures involving Mercedes-Benz, BMW, and Volkswagen were hit with some of the highest tariffs, up to 37.6%. These automakers had only recently begun producing cars in China and hadn't yet imported them to Europe, which made it difficult to comply with EU data requirements, leading to their classification as "non-cooperative."
Despite the tariffs, most Chinese automakers are pressing ahead with plans to expand in Europe. Their response? Tweaking product lines and planning local production.
One immediate strategy has been to replace fully electric vehicles, which are subject to the tariffs, with hybrids or gasoline-powered models. For instance, MG launched its first hybrid model, the MG3 hatchback, in August, with demand exceeding expectations. SAIC has already pledged that its total European sales won't dip in 2024. Others, like Great Wall Motors, are scaling back their investments in new energy vehicles or shelving them entirely.
The second approach involves setting up local production. SAIC has begun manufacturing in France, while BYD is building factories in Hungary and Turkey. Chery is teaming up with Spain's Ebro-EV for joint production, and both Xpeng and Changan are scouting European sites for potential plants. The strategy is a long-term bet to sidestep trade conflicts by establishing local roots.
According to Dataforce, Chinese EV registrations in Europe fell by 9,000 in July, totaling around 14,000 vehicles—a 9.7% year-on-year drop. Many Chinese automakers had rushed to register vehicles before the tariffs took effect. Notably, BYD bucked the trend, doubling its European registrations in July, though its market share remains below 0.1%.
