China EV tariffs: here's how automakers will get past them and enter Europe

The previously announced increase in tariffs on China-made electric vehicles will go into effect on Friday (July 5th, 2024), as per the European Commission. 

Regulators in the EU will now impose duties in the range of 17.4% to 37.6% on EVs imported from Beijing. 

But these tariffs are unlikely to stop Chinese electric vehicle companies from aggressively expanding into Europe, says Vivek Vaidya of Frost & Sullivan. 

What could Chinese EV makers do to get past EU tariffs?

Europe is an EV-friendly region both in terms of the customer base as well as the policies.

And so, Chinese EV makers will invent a “100 different ways to get into Europe” despite the increased tariffs, Vaidya told CNBC in an interview on Thursday. 

One of them, he added, may be setting up a factory in Thailand that has an FTA with Europe. 

Chinese EV tariffs are a temporary measure only

Vivek Vaidya is convinced that higher tariffs on China-made EVs will prove to be a temporary measure only. 

What manufacturers in Beijing may also do to get past them and grow in the EU is set up a company that’s headquartered in Europe and has a European name and outlook. 

Note that before the European Union, the United States imposed massive tariffs on import of EVs from China and Canada followed suit as well. 

Nio Inc may raise prices in Europe

Increased tariffs that EU imposed on Chinese electric vehicles will affect several notable names including BYD and Nio Inc. 

In fact, Nio is maintaining prices for now but said it “cannot be ruled out that prices may be adjusted at a later stage as a result of these tariffs being imposed” on Thursday. 

Its peer Xpeng also confirmed this morning that customers who place an order for its EV before the new duties take effect won’t have to pay higher prices. 

Interestingly, the U.S. giant Tesla Inc may also be affected by the new European tariffs as it has a factory in Shanghai. Elon Musk has already disclosed plans of raising prices for the Model 3 in Europe in response to the higher duties. 

The EU plans on announcing an “individually calculated duty rate” on TSLA that reported 443,956 deliveries for the second quarter this week - more than 439,000 that analysts had forecast. Shares of the EV behemoth are trading just under $250 at writing.