The Intricate Dance of Tariffs and Trade Affecting Chinese EVs

ℹ️ The article was first published on LinkedIn on 14.05.2024.

Greetings in the fourteenth edition of China EV Pulse,

our continuous exploration into the developments of Chinas electric vehicles in Europe. Your dedication and enthusiasm for this rapidly evolving field inspire every issue we create. Committed to providing you with thorough and perceptive analyses, we focus on the most current trends, breakthrough technologies, and the dynamic landscape of this vibrant sector.

Dive into this issue with us as we explore what the future holds for electric vehicles. Enjoy discovering the insights in China EV Pulse!

In April, Chinese automakers continued to strengthen their position in the global automotive market, with sales increases that indicate a rising international interest in Chinese electric vehicle (EV) brands. BYD led the pack with a record-breaking sale of 313,245 alternative drive vehicles, including EVs and plug-in hybrids, marking a 49% increase from the previous year. The company sold 134,465 pure electric vehicles in April alone, representing a 29% increase year-over-year, despite a 4% decrease from the previous month.

Li Auto, known for its range-extender EVs, reported a slight increase with 25,787 vehicles delivered in April, a modest 0.41% rise from last year, and an 11% decline from March. The company recently introduced its first all-electric model, the Li Mega MPV, and has adjusted its sales forecast for 2024 downward due to the tepid growth.

Nio, another major player, delivered 15,620 vehicles in April, showing a remarkable 135% growth from the previous year, across its diverse lineup including eight models. Nio's upcoming ET9 sedan highlights its efforts to expand and diversify its product range.

Xiaomi, traditionally a smartphone manufacturer, is making significant strides in the auto industry. It delivered 7,058 units of its SU7 model in April, with 88,063 pre-orders by the end of the month, indicating strong market demand. In response, Xiaomi has ramped up production capacities to meet its annual target of 100,000 vehicles.

XPeng delivered 9,393 EVs in April, a 33% increase from the previous year, and announced ambitious plans for its new Mona brand, aiming to launch a new model in the smart electric vehicle segment next year.

Zeekr, a premium brand under Geely, delivered 16,089 vehicles in April, setting a record and reflecting a 99% increase from the previous year. From January to April, Zeekr delivered a total of 49,148 units, marking a 110% increase over the same period last year, which underscores the brand’s strong market presence and ambitious sales targets.

At the Auto China expo in Beijing, the new electric vehicle brand Stelato was unveiled, marking a significant collaboration between BAIC and Huawei. The Stelato S9, a luxury electric sedan over 5 meters long, is set to launch in China around July or August this year.

It will offer a 227 kW rear-wheel-drive model and a planned all-wheel-drive variant with an additional 158 kW front motor. Pricing is still speculative, ranging from approximately €38,700 to €64,500.

Huawei, primarily known for its smartphones in Germany, is deepening its ties to the automotive sector, evident from its partnerships with companies like CATL and its involvement in other vehicle projects such as the Aito M9 luxury SUV. This venture is part of a broader trend where tech giants are increasingly engaging in automotive innovations.

BYD plans to launch a new version of its electric compact car, the BYD Seagull, in Europe in 2025, distinct from the model sold in China. According to statements in the Spanish magazine Forococheselectricos by Stella Li, Executive Vice President at BYD, the European version will be a completely redesigned Seagull.

The new model is expected to be larger than its Asian counterpart, aiming to compete in size with the Renault 5, and possibly priced competitively against the Dacia Spring, which starts at around €17,000. Additionally, BYD is exploring the possibility of establishing more production facilities in Europe, with potential sites in Germany, Spain, or France to meet increasing demand.

HiPhi, a premium electric vehicle brand under the Chinese manufacturer Human Horizons, has received a strategic investment from a Hong Kong-based entity, enabling it to resume operations and production soon. The financial infusion comes after HiPhi announced a six-month production halt in February, amid delays in salary payments, bonus cancellations, and wage cuts. However, the situation now looks more optimistic, with production expected to restart by late April or early May, according to a Chinese EV news portal.

Germany now offers a new electric vehicle, the Cenntro Avantier C, priced at €14,500. Imported by Heidtmann Mobility, which specializes in micromobility and operates on the bleudQ platform, this vehicle is categorized as a light vehicle and originates from China. Measuring three meters in length and weighing just over a ton, the Avantier C is powered by a 14 kWh battery allowing a range of 180 kilometers and a top speed of 90 km/h, making it highway legal. It takes eight hours for a full charge. The vehicle comes equipped with essential safety features including ABS, a driver airbag, EPS, and a rearview camera.

Chinese automaker BYD has unveiled the BYD Sea Lion 07, the first electric vehicle using its new 3.0 Evo platform. As reported by CnEVpost, this platform offers enhanced integration, a more robust powertrain, and superior charging performance. The Sea Lion is a mid-sized electric SUV measuring 4.83 meters in length, 1.92 meters wide, and 1.62 meters tall, and marks the debut of the Ocean-Array SUV series.

The base model features a 170 kW (231 horsepower) motor with 380 Newton meters of torque, accelerating from 0 to 100 km/h in 7.3 seconds, equipped with a nearly 72 kWh lithium iron phosphate battery. The mid-range models are powered by a 230 kW (313 horsepower) motor, reducing the 0-100 km/h time to 6.7 seconds, and feature a slightly larger battery exceeding 80 kWh.

The top-tier all-wheel-drive model boasts a system power of 390 kW (530 horsepower), achieving 0 to 100 km/h in just 4.2 seconds, with a top speed of 225 km/h. This variant also uses the larger battery. Notably, all four versions of the Sea Lion 07 EV can charge from 10% to 80% in 25 minutes, with the final 20% charging in just 18 minutes.

BYD, a leading Chinese automaker, is planning to further establish its presence in Europe by potentially opening a new factory, with construction possibly starting next year. This plan was discussed by Michael Shu, BYDs European CEO, who highlighted the company's strategy to not just operate in Europe but to become a European entity itself.

This move aligns with BYDs goal to introduce an affordable electric vehicle, the BYD Seagull, to the European market. Although it's unclear if the Seagull will be produced at the new facility, the expansion underscores BYDs commitment to increasing its market share and presence in Europe significantly. The company aims to capture a 5% market share in Europe by 2030, building trust with local production and using European labor and suppliers.

During Chinese President Xi Jinping's state visit to Paris, French Finance Minister Bruno Le Maire expressed support for Chinese electric vehicle giant BYD to open a factory in France. This announcement comes amidst Europe's automotive concerns about the influx of cheaper Chinese electric cars.

Frances openness to foreign investment reflects a strategic shift, despite recent skepticism towards Chinese EVs due to their competitive pricing. BYD plans its first European factory in Hungary for 2026, aiming for a significant production capacity. This move aligns with broader trends of Chinese automakers expanding in Europe amid potential new EU tariffs on Chinese vehicles.

The European Commission is investigating whether Chinese automakers, including BYD, Geely, and SAIC, are unfairly benefiting from state subsidies for electric vehicles, potentially leading to punitive tariffs. Politico reports that the Commission is pushing these manufacturers for better cooperation and warns that tariffs could increase without improvements.

The investigation, which could conclude by early July, stems from concerns over incomplete supplier information provided by the automakers. Analysts from the Rhodium Group suggest that even with tariffs between 15 to 30 percent, Chinese automakers would remain profitable, with significant impact only at levels up to 50 percent.

The prospect of EU tariffs on Chinese vehicles has sparked controversy within the European automotive industry, with fears of retaliatory tariffs from China and opposition from various industry stakeholders and German Federal Minister of Transport, Volker Wissing.

The U.S. government is poised to dramatically increase tariffs on Chinese electric vehicles, potentially raising them from the current 25% to 100%. This decision, expected to be announced on Tuesday, is part of a broader response to growing Chinese dominance in renewable energy sectors, which the U.S. views as a threat to its emerging industries. This tariff increase continues the trend set by former President Trump, who had previously imposed significant tariffs on Chinese goods.

Amidst ongoing trade tensions, this move is mirrored in Europe where the European Commission is also considering tariffs on Chinese EVs due to potential unfair subsidies. Both Biden and Trump have shown strong stances against China in their trade policies, with the upcoming U.S. presidential election potentially influencing further trade decisions.

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Sebastian | China EV Pulse