Due to the EU’s announcement of increased tariffs on Chinese-made electric vehicles, Tesla has announced that it will raise the price of the Model 3 in the European market starting in July, though the extent of the price increase has not been specified.

According to a report from CNBC, Tesla CEO Elon Musk stated on June 13th that the Model 3 price in the European market will be adjusted starting July 1st due to the EU tariffs, without revealing the specific increase.

Per a report from Reuters, the European Commission has announced that, starting July 4th, it will impose tariffs ranging from 17.4% to 38.1% on electric vehicles imported from China. The tariff rates will vary depending on the extent of government subsidies received by each automaker. This measure aims to prevent Chinese manufacturers benefiting from government subsidies from undercutting the market with cheap electric vehicles, thereby harming the EU automotive industry.

It is unclear how much of a tariff will be imposed on Tesla’s Chinese-made electric vehicles. The European Commission stated that Tesla will be subject to an individually calculated tariff rate. Whether Tesla cooperates with the EU authorities’ anti-subsidy investigation will also influence the final tariff rate applied.

Although the EU has decided to impose high tariffs on Chinese electric vehicles, there are still differing opinions among various parties. The German government and automotive industry have reacted most strongly, fearing it could ignite a China-EU trade war.

Per a report from Xinhua citing sources, Tesla’s Shanghai plant is the U.S. car manufacturer’s first gigafactory outside the US, delivered 947,000 vehicles in 2023.

As per a previous report from Barron’s, German Transport Minister Volker Wissing stated that, “The European Commission’s punitive tariffs hit German companies and their top products. Cars must become cheaper through more competition, open markets and significantly better business conditions in the EU, not through trade war and market isolation.”

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(Photo credit: Tesla)

Following an eight-month anti-subsidy investigation, the EU announced on June 12th that it will increase the temporary tariff rate on all Chinese electric vehicle companies from the current 10% to as high as 38.1%. According to a report from CNBC, the European Commission warned that if an agreement on automotive production capacity with China cannot be reached, the new tariffs will be implemented around July 4th.

Per the same report, the European Commission has announced the latest tariff rates, imposing additional tariffs on Chinese electric vehicle manufacturers BYD, Geely, and SAIC Group at rates of 17.4%, 20%, and 38.1%, respectively.

Other companies cooperating with the investigation will be subject to a 21% tariff, while non-cooperating companies will face tariffs as high as 38.1%. American automotive giant Tesla’s electric vehicles produced in China will be subject to a separate tariff rate following the investigation.

As per another report from BBC cited by Commercial Times, nearly 50% of the electric vehicles exported from China to the EU are from Western car brands such as Tesla, Volkswagen, and BMW, with Tesla alone accounting for about 40%. In contrast, the annual sales of Chinese electric vehicle brands in Europe are less than 200,000 units, with a market share of less than 8%, mainly represented by BYD, SAIC Group (which owns the European brand MG), and Geely.

Per a report from the Global Times on June 12th, China’s Ministry of Commerce strongly reacted, expressing discontent on the matter. China, reportedly, will closely monitor the EU’s subsequent actions and take all necessary measures to firmly defend the legitimate rights and interests of Chinese enterprises. The China Association of Automobile Manufacturers also expressed deep regret and stated that the decision is absolutely unacceptable.

Although the EU has decided to impose high tariffs on Chinese electric vehicles, there are still differing opinions among various parties. The German government and automotive industry have reacted most strongly, fearing it could ignite a China-EU trade war.

As per a report from Barron’s, German Transport Minister Volker Wissing stated that, “The European Commission’s punitive tariffs hit German companies and their top products. Cars must become cheaper through more competition, open markets and significantly better business conditions in the EU, not through trade war and market isolation.”

Per a report from Reuters, BMW Group Chairman Oliver Zipse stated that the European Commission’s decision to impose tariffs on Chinese electric vehicles is a wrong way to go. Volkswagen expressed that the European Commission’s decision detrimental to the current weak demand for BEV vehicles in Germany and Europe.

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

(Photo credit: Pixabay)

On May 31, STMicroelectronics announced to build a new high-volume 200mm silicon carbide (SiC) facility in Catania, Italy, for power devices and modules as well as test and packaging.

According to a report from WeChat account DRAMeXchange, the new plant aims to commence production in 2026 and ramp to full capacity by 2033, with a full production capacity of up to 15,000 wafers per week. The total investment is expected to be around EUR 5 billion, with a support of around EUR 2 billion provided by the State of Italy in the framework of the EU Chips Act.

ST stated that Catania Silicon Carbide Campus will serve as the central hub of ST’ s global SiC ecosystem, integrating all steps in the production flow, including SiC substrate development, epitaxial growth processes, 200mm front-end wafer fabrication and module back-end assembly, as well as process R&D, product design, advanced R&D labs for dies, power systems and modules, and full packaging capabilities. This will achieve a first of a kind in Europe for the mass production of 200mm SiC wafers.

Currently, ST is producing its flagship high-volume SiC products on two 150mm wafer production lines in Catania, Italy, and Ang Mo Kio, Singapore. The third center is a joint venture between ST and San’an, which is now building a 200mm plant in Chongqing, China, dedicated to serving ST’s Chinese customers.

ST’s wafer production facilities are supported by automotive-qualified, high-volume assembly and test operations in Bouskoura (Morocco) and Shenzhen (China). SiC substrate R&D and industrialization is undertaken in Norrköping (Sweden) and Catania, where ST’s SiC substrates manufacturing facility is ramping up production and most of ST’s SiC product R&D and design staff are based.

SiC is a compound semiconductor material with inherent properties that offer superior performance and efficiency in power applications compared to silicon. Driven by market demands in new energy vehicles, photovoltaic storage applications, the usage volume of SiC power devices continues to rise.

As per TrendForce’s survey, the market size of global SiC Power Device was around USD 3.04 billion in 2023 and is expected to grow to USD 9.17 billion by 2028 at a CAGR of 25%.

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(Photo credit: STMicroelectronics )

The European Commission initiated an investigation into Chinese electric cars in October last year, targeting BYD, SAIC Group and Geely, with plans to impose provisional tariffs on new electric cars imported from China. According to previous media reports, the plans were originally scheduled to be announced by June 5th. However, as per Reuters citing sources in a latest report, the new date for announcing the imposition of temporary tariffs has been set for June 10th, after the European Parliament election.

The sources cited in the report also mentioned that the delay was due to last-minute technical issues with the documents. As of now, the European Commission has not provided comments on this matter.

Yet, the same report further noted that the European Commission has formally warned the three Chinese electric car companies under anti-subsidy investigation that the data they provided for the investigation was insufficient.

According to trade data from 2023, for every additional 10% tariff imposed by the European Union on top of the existing 10%, Chinese electric car exporters would lose approximately $1 billion.

Reuters reported that past subsidy investigations launched by the European Union on other products imported from China resulted in additional tariffs ranging from approximately 9% to 26% for related companies, while the tariffs on the Chinese electric car companies may possbly fall between this range.

The report also indicated that China may be preparing alternative plans for future negotiations. If enough EU members oppose the temporary tariffs after four months, there might be challenges to the EU’s temporary tariffs, possibly leading to their cancellation.

According to an earlier analysis by Trendforce, 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. But they may have to counter various challenges, as countervailing duty investigation being one of them.

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• [News] Punitive Tariffs on Chinese EVs by US Reportedly to Further Hinder BYD, Leapmotor and Others’ Global Expansion Plan, while EU Investigation Persists
• [News] EU Reportedly to Counterdump Semiconductor and Electric Vehicles from China

(Photo credit: Pixabay)

According to Bloomberg, mega economies like the US and the EU have invested tens of billions of dollars in the research and mass production of next-generation semiconductors, and notably, this is only the initial amount of funding already received.

Meanwhile, South Korea and Japan have also joined the “subsidy race” for chips. With substantial investments continuously pouring into the semiconductor industry, global chip competition will intensify.

• Korea to Allocate USD 19 Billion to Support Chip Industry

On May 23, Korea announced a comprehensive support plan for semiconductor industry, with an investment of up tp KRW 26 trillion (~ USD 19 billion). This plan intends to provide large-scale financing support and rev up investments in the construction of semiconductor parks and various infrastructures, and the cultivation of research and development personnel, involving companies include chip manufacturers, raw material suppliers, and chip design companies.

The core of this plan is a financing support project by the Korea Development Bank, valued at KRW 17 trillion (~USD 12.4 billion), specifically for semiconductor infrastructure investment. Additionally, Korea will extend tax concession for chip investment to ensure the smooth progress of semiconductor supercluster investment.

Semiconductor is a vital industry for Korea’s economic growth. In response to substantial subsidies for chip industry from the US and EU, Korea is actively promoting the development of its local chip industry.

In January 2024, Korea launched the “World’s Largest and Best Semiconductor Supercluster Construction Plan,” proposing an investment of KRW 622 trillion (~USD 454 billion) by 2047, which is to build 16 new plants, inclusive of R&D facilities, and construct “Semiconductor Supercluster”in semiconductor-intensive cities such as Pyeongtaek, Hwaseong, Yongin, Icheon, and Suwon in southern Gyeonggi Province. It’s estimated that the chip production capacity will reach 7.7 million wafers per month by 2030.

• Europe to Draw in EUR 100 Billion in 2030

Recently, an EU Commission official revealed that the “European Chips Act” is expected to help the European semiconductor industry attract more than EUR 100 billion (~USD 108 billion) in funding by 2030.

The official also stated that the EU Commission plans to complete reviewing the support plan of four advanced semiconductor pilot lines by September and is planning another pilot line for silicon photonics chip with an unspecified investment scale.

The “European Chips Act” officially came into effect in September 2023, aiming to increase the EU’s share of the global semiconductor market from the current 10% to at least 20% by 2030. The act promises to allocate EUR 43 billion (~USD 46.4 billion) in subsidy funds, with EUR 11 billion (~USD 11.8 billion) for the development of advanced process chip technology.

Industry sources indicate that Europe’s two largest chip projects are located in Germany. Germany plans to provide USD 20 billion in subsidies to increase chip production, of which around 75% will go to Intel and TSMC.

Intel is projected to invest over EUR 30 billion (~USD 33 billion) in building a wafer plant in Magdeburg, Germany, with an expected government subsidy of nearly  USD 11 billion. TSMC plans to build its first European factory in Germany, which will also receive government subsidies. Recent media reports indicate that efforts in establishing this factory is proceeding as planned, with construction expected to begin in the fourth quarter of 2024.

• Japan to Raise USD 25.3 Billion for Chip Sector

To enhance semiconductor R&D and production capabilities, Japan is also providing massive subsidies in the semiconductor field, including taking in foreign investment to build factories and strengthening local state-of-the-art process R&D and production.

It’s reported that since Japan formulated the “Semiconductor and Digital Industry Strategy” in June 2021, the Ministry of Economy, Trade, and Industry has raised approximately USD 25.3 billion for its chip industry, involving companies like TSMC and Rapidus.

In February, TSMC’s Kumamoto plant officially opened, marking TSMC’s first factory in Japan (Fab 23). The total production capacity will reach 40-50Kwpm  wafers per month, focusing on 22/28nm processes and a small part on 12/16nm, paving the way for the main process of the second Kumamoto plant.

In April, Japan approved a subsidy of up to USD 3.9 billion for Rapidus, a domestic semiconductor manufacturing company to mass-produce 2nm chips by 2027.

In addition to wafer foundries, Japan is also spotlighting memory industry. Previously, the Ministry of Economy, Trade, and Industry announced a subsidy of JPY 242.9 billion (~USD 1.546 billion) for Kioxia and Western Digital to build two advanced NAND flash memory chip production plants in Mie and Iwate Prefectures, attempting to meet the demands from AI and big data center markets. The joint venture plants will produce 218-layer 3D NAND chips.

• The US to Offer USD 29 Billion to TSMC, Samsung and Intel

The US “CHIPS and Science Act” was introduced in August 2022, providing USD 52.7 billion for chip research, development, manufacturing, and workforce development in the US, and offering a 25% investment tax credit for capital expenditures on manufacturing chips and related equipment.

It’s reported recently that since December 2023, the US has allocated about USD 29 billion in subsidies to companies such as Samsung, TSMC, Intel, and Micron. These chip manufacturers have pledged to invest approximately USD 300 billion in current and future chip manufacturing projects in the US.

In April, Micron, Samsung, and TSMC received US funding subsidies. Micron will establish two new chip manufacturing plants in upstate New York and Boise, Idaho (Its headquarter), with a fund of USD 6.14 billion. Samsung will build a plant covering leading logic, R&D, and advanced packaging in Taylor, Texas, and expand the production of mature process nodes in Austin, Texas, with a fund of USD 6.4 billion. TSMC is developing three cutting-edge wafer plants in Phoenix, Arizona, receiving USD 6.6 billion in subsidies.

Previously, Microchip Technology and Intel also secured USD 162 million and USD 8.5 billion in funding, respectively. Intel’s USD 8.5 billion is the largest single subsidy provided under the CHIPS Act to date, with which Intel will advance its commercial chip projects in Arizona, New Mexico, Ohio, and Oregon.

Read more

• [News] South Korea Reportedly Unveils USD 19 Billion Semiconductor Subsidy to Boost R&D and Infrastructure Investment
• [News] US Allocates USD 39 Billion Subsidy to Semiconductor Industry for Establishing Plants

(Photo credit: Intel)