Chinese EV Makers Hit EU Wall as Tariffs Add to Import Costs

(Bloomberg) — Chinese automakers captured their smallest share of Europe’s electric-vehicle market in eight months, after new tariffs added as much as 35% to the cost of importing cars to the region.

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Manufacturers such as BYD Co. and SAIC Motor Corp.’s MG accounted for 7.4% of EV registrations across Europe in November, down from 8.2% in October, according to automotive researcher Dataforce. That’s the lowest level since March.

The European Union imposed the added tariffs at the end of October, after an investigation found that state aid had provided China’s EV industry with an unfair advantage. Months of talks failed to resolve the trade dispute, leading Brussels to tack the new fees onto an existing 10% import duty.

While all EVs produced in China are subject to the tariffs, including ones made by Western brands like BMW AG and Tesla Inc., the amounts vary depending on how much support an automaker received and whether it cooperated with the EU’s probe.

MG’s state-owned parent SAIC was hit hardest, with tariffs that now total 45%. Long the top-selling Chinese carmaker in Europe, the once-British sportscar brand has faltered recently, logging a 58% drop in registrations last month from a year earlier, based on data provided by Jato Dynamics, another research firm.

Amid MG’s retreat, BYD has pressed ahead, with registrations across Europe more than doubling in November to 4,796 vehicles.

“BYD is taking over the market while MG is taking major setbacks,” said Julian Litzinger, an analyst with Dataforce. BYD’s growth is healthy, he added, with nearly 80% of its registrations attributed to private and fleet customers.

Chinese carmakers, eager to expand to major global markets, have hit resistance in Europe after being effectively shut out from the US. The country’s worldwide EV exports fell 19% in November from a year earlier, according to Chinese customs data released on Monday, including a 23% drop to the EU.

Lower battery costs have given Chinese firms a price advantage, but the issue has stirred protectionist impulses as officials in the US and EU work to shield local automakers. The industry, which employs hundreds of thousands of workers in Germany, France and Italy, is struggling with the transition away from combustion-powered cars.

While the EU tariffs have blunted China’s push in the region, their introduction generally led to a smaller-than-expected setback, Litzinger said.

In Germany and France, however, EV registrations by Chinese manufacturers more than halved in November from a year earlier, he said. By contrast, Chinese EV makers posted a 17% year-over-year gain in the UK, which isn’t a member of the EU and hasn’t adopted the tariffs.

The shift toward EVs, once seen as inevitable, has slowed in 2024 in many global markets and become more unpredictable, leading automakers to reassess their strategies from model lineups to plant locations and even corporate structures.

Chinese automakers are taking steps to localize production in Europe, but those efforts will take time to mature.

Globally, car companies are looking for ways to share costs as they try to keep up on expensive technological change. Last week, it emerged that struggling Nissan Motor Co. was exploring a tie-up with fellow Japanese manufacturer Honda Motor Co., partly to strengthen their ability to compete in EVs.

–With assistance from Alberto Nardelli.

(Updates with China export figures in eighth paragraph)