The European Union’s decision to impose a customs duty of up to 38 percent on electric vehicles imported from China had a great impact in the automotive industry. Especially German automobile manufacturers Mercedes-Benz, BMW and Volkswagen, while they have achieved great success in the Chinese market, are worried that these taxes will have a negative impact on their operations in China.
BMW CEO Oliver Zipse stated that the EU’s protectionist measures could trigger a trade war and harm European companies. Mercedes CEO Ola Kallenius emphasized the need for open trade and cooperation. Volkswagen, on the other hand, questioned the timing of the EU’s decision and stated that the demand for electric vehicles in Europe is weak.
The EU sees these taxes as a measure against the large subsidies Chinese automakers receive. However, Germany’s VDA industrial association argues that these taxes could cause further damage to the European automotive industry.
These taxes are not limited to just Chinese automakers. Western manufacturers that export electric vehicles produced in China to Europe, such as Tesla, BMW, Volvo and Renault’s Dacia brand, will also be affected by these taxes. This means billions of euros in additional costs for these companies, creating a huge burden for companies already struggling with slowing demand and falling prices.
Volvo Vice President Bjorn Annwall stated that these additional costs will eventually be passed on to consumers and electric vehicles will become more expensive. Volvo, owned by China’s Zhejiang Geely Holding, sees these taxes as an obstacle as an advocate of free trade.
The EU’s decision aims to protect its own electric vehicle industry from the influx of lower-cost Chinese models. However, some economists argue that the impact of these taxes will be limited in the short term. The Kiel Institute for the World Economy predicts that these taxes could significantly reduce electric vehicle imports from China and be offset by increased production in Europe.
China has stated that it will protect its rights and interests, but has not yet made a statement that it will retaliate. The China Passenger Automobile Association, on the other hand, was less concerned about this situation and expressed confidence that Chinese electric vehicle manufacturers will continue to grow in Europe.
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