The influx of Chinese electric vehicles into the European market has sparked research into how implementing significant new tariffs would address the competitive advantage enjoyed by automakers in China. With a quarter of EVs sold in the EU this year expected to originate from China, European policymakers are evaluating measures to level the playing field in the automotive industry.
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Chinese state subsidies on EVs have enabled manufacturers to offer their vehicles at much lower price points compared to their European counterparts. On average, Chinese EVs are nearly a third cheaper than the average EV sale price in Europe. This advantage has allowed Chinese companies like BYD to capture a sizable market share in Europe, while still imposing higher prices on the vehicles they make than in their own domestic market.
For example, the BYD Seal U — priced at around $22,000 in China — is priced over twice that amount in Europe, at approximately $45,000. Despite this markup, the vehicle remains a competitive option for European buyers, costing about $10,000 less than the average EV sale price throughout the continent.
To address concerns about the growing dominance of Chinese EVs in Europe, the EU is considering revising tariffs on these imported vehicles. Currently, there is a 10% tariff on Chinese car imports. Studies suggest that a much higher rate, potentially up to 50%, may be necessary to slow the proliferation of Chinese EVs into the European market.
Such a tariff would place European duties among the highest globally on cars and nearly double the existing tariff imposed by the United States on vehicles imported from China. In the U.S., the Biden administration has reportedly contemplated increasing the existing 27.5% tariff, while former President Donald Trump has proposed raising it to 100% if reelected.
