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Trade war looms as Brussels hits firms with import charges

China has been accused of dumping cheap electric cars on EU countries. But poor sales, price wars and tariff threats have prompted a change of mood among some Chinese auto producers.

The EU is set to impose tariffs of up to 38% on Chinese electric vehicles to stop the dumping of cheap cars. But some auto producers are already scaling back investments in Europe due to poor sales.

To counteract market dumping, the European Union will slap tariffs of up to 38% on electric vehicles from China. This puts additional strain on China’s EV manufacturers, which already face poor sales in Europe.

BYD is building it first plant in Hungary, while Leapmotor will use a Stellantis factory in Poland, as Chery eyes production in Spain and possibly Italy; Great Wall, SAIC and Dongfeng are also assessing opportunities

European governments may be wary of budget Chinese electric vehicles flooding their markets but they're also fiercely competing for a share of the manufacturing investment and jobs the new competitors bring. While the European Union investigates China's auto subsidies and considers tariffs on imports, national governments across the bloc are dangling their own incentives to attract Chinese automakers looking to build European factories. Manufacturing costs for Chinese EV makers including BYD, Chery Automobile and state-owned SAIC Motor are much lower at home but they are nonetheless keen to set up in Europe to build their brands and save on shipping and potential tariffs, said Gianluca Di Loreto, a partner at consultancy firm Bain & Company.

The European Union is expected to unveil tariffs in the coming weeks targeting Chinese electric cars following a probe into Beijing’s EV subsidies.

BYD Co., Ltd. maintains its position as the world's second-largest EV battery manufacturer from January to April.

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