Chinese cars take lead, but E.U. slams brakes with tariffs

On the global stage, Chinese automakers outsold their U.S. competition for the first time last year, but that trend could change very soon.

At a glance: Weeks after America decided to increase tariffs on Chinese EVs from 25% to 100%, the European Union followed suit, albeit less aggressively. 

Additional tariffs of up to 38.1% on EVs imported from China will be implemented as of next month, raising the stakes on a global trade war and increasing the cost of retailing cars in a major market. 

Individual duties:

• BYD: 17.4% 

• Geely: 20% 

• SAIC: 38.1% 

• Not sampled by the E.U.: 21% 

• Didn't cooperate in the investigation: 38.1%

Why now? Following an investigation of subsidies, the E.U. is determined to avoid repeating the fate of its solar industry. Back then, European companies couldn't compete with heavily subsidized Chinese rivals and lost their home market. Now, the E.U. faces a similar challenge, as China heavily subsidizes electric vehicles and other green technologies.

• Almost one-fifth of battery electric vehicles sold in the EU in 2023 were made in China.

• BYD alone sold a staggering 13.4 million vehicles globally last year, surpassing established American names like Ford and Chevrolet, according to Jato Dynamics.

Tesla’s response? It plans on increasing the European prices for its Model 3 vehicles.

What’s more: Tesla has a major Gigafactory located in Shanghai. In 2023, the U.S. automaker delivered a whopping 947,000 vehicles from this factory, according to Chinese state media. That's a big contribution to the global market. 600,000 went to China. The other 347,000 were exported to other countries.

The goal here is clear: Keep the European market open to EV producers from China but at arm’s length. They can stay if they follow global trade rules. But, the EU currently walks a tightrope. It must protect the region’s auto industry while pushing a green-heavy agenda.

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