The European Union has now confirmed that a provisional tariffs of up to 37.6% will be applied to electric vehicles made in China in a bid to combat what it describes as unfair subsidises to manufacturers which could cause a flood of the EV market. 

The speculation regarding tariffs has already slowed Chinese EV export sales growth estimates and had a major impact on sales. The move has also had an impact on Tesla, which makes many models destined for Europe in Chinese factories. 

The European Commission has issued a 208-page document that explains the reasoning for the decision. It says “The development of the subsidized imports would pose an imminent threat to an already vulnerable Union industry.” 

The report concludes that Chinese-built EVs can undercut similar European vehicles by around 13% and that this was forcing European makers to cut prices to unsustainable levels. 

The new tariffs apply to cars driven totally by electric, although not hybrids and plug in hybrids. It does however cover range extender hybrids, where a small engine supplements a large battery. These have become popular in China and although only BMW has made the technology available in Europe, other manufacturers are now experimenting with it.  

The European Commission has based its tariff rates partly on the level of cooperation Chinese car makers have provided as well as the level of subsidy they estimate they receive.  Thus BYD has been applied a 17.4% tariff, while Geely, which owns Volvo and Lotus, has a 19.9% tariff. SAIC, the company behind the MG brand is the potential big loser with a 37.6% rate. Chinese made cars from the Tesla and BMW face a 20.8% rate.   

Provisional tariffs will be in place until November 3rd., with the possibility of permanent measures after that.  

Some Chinese EV makers are already implementing plans to move production to Europe to avoid tariff disruption. There could also be retaliation by China which could impose new duties on European made exports. MG owner SAIC is also considering a legal challenge.