[News] Punitive Tariffs on Chinese EVs by US Reportedly to Further Hinder BYD, Leapmotor and Others’ Global Expansion Plan, while EU Investigation Persists

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The latest punitive tariffs imposed on Chinese-made electric vehicles (EVs) by the Biden administration are likely to discourage BYD, Leapmotor, and other local manufacturers from their global expansion plans, though the US is not their key target yet, according to a report by the South China Morning Post, citing Chen Jinzhu, CEO of consultancy Shanghai Mingliang Auto Service.

Citing Stephen Dyer, Greater China co-leader and head of the Asia automotive practice at global consultancy AlixPartners, the report stated that Chinese automakers are expected to go to Europe first, among other established and mature markets, as they monitor the evolving political landscape in the US.

President Biden announced new tariffs on Tuesday, targeting Chinese electric vehicles, semiconductors, batteries, solar cells, steel, and aluminum. The tariffs on Chinese EVs will increase to 100%, quadrupling the current rate of 25%, which takes effect in 2024.

As a result, some Chinese EV makers are expected to become more cautious about expanding overseas. In the meantime, these manufacturers are also preparing for potential challenges in Europe, where the European Commission began investigating Beijing’s subsidies for carmakers last year, according to South China Morning Post.

In October, 2023, the European Commission, responsible for trade policy in the 27-nation European Union, initiated an investigation to determine if fully electric cars manufactured in China were benefiting from distortive subsidies and thus merited additional tariffs.

The deadline for implementing provisional measures like tariffs or quotas is July 4, nine months after the Commission initiated its investigation, according to EU regulations.

In January, TrendForce has projected that the global sales volume of NEVs (including BEVs, PHEVs, and FCVs) is estimated to reach approximately 12.8 million units in 2023. Regional market sales shares are expected to be 60% in China, 22% in Western Europe, 11% in the United States, and 6% in other regions, with China’s market demand distinctly in the lead.

However, with China’s subsidies gradually phasing out and the increasing market penetration of NEVs in the country, the growth rate of China’s NEV market is starting to slow. This, coupled with the growing demand for electric vehicles in overseas markets, is prompting numerous Chinese automotive brands to expand internationally, particularly in Southeast Asia, where they are projected to hold a 67.5% market share in 2023.

(Photo credit: BYD)