EU duties might not be enough to hold off flood of Chinese EVs
- Reference: 1714487410
- News link: https://www.theregister.co.uk/2024/04/30/report_eu_duties_electric_vehicles/
- Source link:
The European Commission launched an [1]investigation into subsidized electric cars from China in 2023 and warned that subsidy duties might be imposed nine months later. With the deadline looming, a [2]report from the Rhodium Group warns that duties on imports alone probably won't be enough to slow market gains for Chinese manufacturers.
According to the research, duties in the 15 to 30 percent range are expected as European Commission regulators seek to shield local automakers – which account for seven percent of the EU's GDP – yet even at the higher end of that range, China-based producers will still be able to generate comfortable profit margins.
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While going as high as 50 percent would make things more challenging, Rhodium Group reckons that policymakers could turn to other tools, such as tightening cybersecurity requirements, to stem the flow.
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EU imports of EVs from China have grown spectacularly in recent years, increasing from $1.6 billion in sales in 2020 to $11.5 billion in 2023. They account for 37 percent of all EV imports in the bloc. EVs in China are considerably cheaper than those in the EU. The Rhodium Group cited Volkswagen's ID.4, which sells for nearly 50 percent more in the EU than in China, and a larger gulf exists for some Chinese producers. The result is bigger profit margins.
"Increasingly, Chinese and foreign manufacturers are taking advantage of China's cheaper labor and energy prices, its more developed battery ecosystem, and [its] government subsidies to produce in China for the European and third markets," said Rhodium Group's report.
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However, simply slapping on duties at the top end of the forecast might not be enough, particularly considering the incentives being given to firms to export to the EU, the world's second-biggest EV market.
So what to do? In an April 2024 [7]speech , EC executive vice president Margrethe Vestager discussed the prospect of trustworthiness in technology, which encompassed factors such as cyber security, labor, and environmental footprint, all of which could impact manufacturers exporting from China.
The issue is tricky. The European market is a lucrative one for exporters, who stand to enjoy far greater profit margins than possible domestically. Duties alone are unlikely to have much effect in the short term, and other measures – for example tightening cybersecurity requirements – could be challenging to implement.
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Instead, policymakers could opt to see what happens over the next year. While the figures might seem grim for EU automakers now, an increase in shipping costs and changes to EV purchasing subsidies in Europe might make measures beyond those expected this summer unnecessary. ®
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[1] https://ec.europa.eu/commission/presscorner/detail/en/ip_23_4752
[2] https://rhg.com/research/aint-no-duty-high-enough/
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZjEVoXJasP6FCRLduL6iigAAAAc&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZjEVoXJasP6FCRLduL6iigAAAAc&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZjEVoXJasP6FCRLduL6iigAAAAc&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZjEVoXJasP6FCRLduL6iigAAAAc&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://ec.europa.eu/commission/presscorner/detail/en/speech_24_1927
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZjEVoXJasP6FCRLduL6iigAAAAc&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[9] https://whitepapers.theregister.com/
Re: E-con-nomics
To make matters worse, China now controls the majority of the mining operations around the world (BBC article published today) to obtain the materials needed for the EV batteries, so even if the EU want to get control of the manufacturing, they'll still need to look to China for the materials, which will likely be prices to compensate for any duties on Chinese goods.
So not only will the increased Duties on Chinese EV's not really work, but the supposed 'green' credentials of the EV's are dependent on China's approach to mining (please refer to said BBC article on what that means these days).
Or the EU and anyone else who wants to avoid buying from China will have to compete for what materials are not being mined by Chinese companies, which means higher demand and that means increases in prices.
So it's not just the worker who gets shafted - it's the consumer, too.
"Increasingly, Chinese and foreign manufacturers are taking advantage of China's cheaper labor and energy prices ..."
Taking advantage of [1]slave labour and [2]dirty power generation to produce 'green' vehicles -- Oh the irony!
[1] https://www.nytimes.com/2022/06/20/business/economy/forced-labor-china-supply-chain.html
[2] https://www.bbc.com/news/world-asia-57018837
I'll stick with diesel if it's all the same to you
Chinese companies like BYD are making some pretty good EVs when compared to Western efforts, especially Tesla.
Of course, the problem with all EVs is they're all pretty much disposable once the traction battery starts giving trouble out of warranty.
E-con-nomics
So EU makes manufacturing difficult and expensive.
Companies move manufacturing to Asia to be able to make decent profit.
The EU adds duty so that product costs as much as if it was manufactured in the EU. Just that the money doesn't go to the workers but to the bureaucrats playing Sims in real life.
Either way workers get ripped off (EU workers by not having jobs, Asian workers for earning peanuts).