Name: EU DECODED: Pros and cons of tariffs on Chinese electric vehicles
Uploaded: 2024-10-23T15:22:32.000Z
Duration: 8 min 1 s
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The European car industry is at a critical crossroads.

The traditional combustion engine has been around for a century and a half, like we are seeing here in this Brussels museum.

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But electric batteries are increasingly replacing them, so that the vehicles do not emit polluting gases.

China is flooding the market with cheaper models and the European industry is selling fewer and fewer.

So the European Commission wants to impose higher tariffs on them starting in November.

Our program UDecoded will decipher this measure for you.

Chinese electric cars sold in the EU have quadrupled between 2020 and 2023 from 1.9% to 8.8%.

And share of the market could reach 17% next year, says the European Commission.

But tariffs ranging from 7.8% to 35.3% will be added depending on the brand.

Because the Beijing government provides large subsidies to the production.

The European tariffs are meant to bring the prices closer to those of the European brands.

But will the consumers agree with this strategy?

In Belgium, we understand that it is very, very difficult to keep low prices with the cost of work that is very high.

Here in Belgium, as you can see, there are a lot of factories that are closing.

So if Chinese cars have just been implanted at the car company that will close in a short time, then yes, if they are cheaper and it can keep employment in Belgium, it is still more important.

I think Europeans are able to produce electrical cars as good as the Chinese do.

So if the laws are in favor, like in Norway, for example, there are a lot of helps of the government to help Norwegian people to buy electrical cars.

So if we do the same in the European Union, of course, I will try to buy an European one.

To further decode this topic, we will now talk with a colleague from Euronews who focuses on this issue.

So before deciding on the tariffs, the European Commission conducted an investigation into the Chinese electric car industry.

The Commission found an ecosystem of subsidies.

We're talking about cheap loans, we're talking about grants, tax reductions, even green bonds.

All of these together help Chinese companies lower the prices of their electric vehicles and sell them abroad with a clear advantage.

So the 27 EU member states had to vote on this measure and five of them were against it.

Notably, Germany, which is an important powerhouse in the automotive industry.

But Italy and France, for example, are in favor.

On the one hand, we have France, the Netherlands, Poland, Italy as well, supporting the tariffs because they believe that if these tariffs are not applied, the European carmakers are going to be pushed out of this very lucrative sector that is going to become more and more important as countries transition towards climate neutrality.

We have to say that Germany recognizes the existence of unfair competition, but believes tariffs are not the correct solution because Germany fears the tariffs could trigger a trade war with China.

And on the other side is the Chinese government that has reacted quite angrily to this from the outset.

So what is their position and can they still stop the tariffs with a political solution?

So China has had a very antagonistic position and in fact has threatened retaliation against key European products such as dairy, brandy and also pork.

Thank you, Jorge, for these explanations.

And let's now show some important facts and figures.

Around 13.8 million people work in the European Union's automotive industry, which represents more than 7% of the EU's wealth produced in one year.

However, the market share of battery electric cars was only 21% in 2023 and even fell to 14.4% this year.

By the way, do you know that by 2035 the EU has to stop selling new combustion engine cars?

The goal is to help reduce the consumption of polluting fossil fuels.

So a lot more electric cars need to be on the roads.

On our Decoding journey, we will now talk to the chair of the International Trade Committee in the European Parliament.

So the tariffs are expected to come into force in November and stay for five years.

Many people say it's the beginning of a trade war.

Can a political solution still be found with China to stop this process?

Let's see how the negotiations will go on.

And perhaps it will take even longer than the 30th of October.

But the purpose of the whole exercise is to find a solution to avoid illegal subsidies so that we have really a level playing field.

So China is already targeting in the same way with higher tariffs on European Union agricultural goods.

Could we expect these measures and this process to have also a cost to the European market in terms of money but in image in the global markets?

Now the Chinese side is gambling and playing a little bit with so-called countermeasures.

And if there is something going on, then we, of course, are able to go to the WTO and make a case on that.

To keep the European electric car industry competitive, manufacturers are asking for other measures like easy access to minerals for the batteries and expansion of the charging points for the owners of these cars and others.

Are European executives doing enough on this?

We have to support the development of batteries.

You know, batteries are making round about 30 up to 40 percent of the added value in an electric car.

So we need the production in Europe, high technology, long range batteries.

One red flag showing that the European car industry is at risk was the decision to close some factories of electric models in Germany and Belgium.

 Thank you for watching and don't miss next week's program for more decoding on European policies.