Electric Vehicle Tariffs Do Not Curb China, PHEV Becomes the Backbone in Europe

JAKARTA - The imposition of tariffs by the European Union on Chinese-made electric vehicles (EV) has not been fully able to hold back the expansion of the country's automotive manufacturers. Instead of losing momentum, many manufacturers are choosing to shift their focus to the plug-in hybrid electric vehicle (PHEV) segment.

It is known that PHEV cars are not affected by tariff policies such as electric cars. This strategy has also proven effective, with Chinese PHEV vehicles now accounting for more than a third of plug-in hybrid car sales in the European region.

Based on the latest sales data, Chinese automotive manufacturers controlled around 34 percent of the PHEV shipment market share last month. The dominance is led by BYD, Chery, and Geely, and is supported by brands that have ownership links with European companies such as Polestar and Leapmotor.

Meanwhile, Dataforce estimates that Chinese manufacturers contributed 11 percent of total new car sales in Europe throughout June and controlled 15 percent of the pure electric vehicle market. However, EV sales growth has not yet been able to surpass the performance of plug-in hybrid vehicles which for the past 18 months have consistently maintained a market share in the range of 10 to 15 percent.

If calculated from the overall hybrid vehicle market, including conventional hybrids and plug-in hybrids, Chinese automotive manufacturers are estimated to have controlled almost 25 percent of the market share in the region. Seeing this trend, the European Union is reportedly preparing further steps.

Reported by Carscoops, Friday, July 24, instead of providing special incentives to local manufacturers, the European Commission is said to be closer to a plan to impose tariffs on plug-in hybrid cars imported from China. The Handelsblatt report said that the policy could be implemented after obtaining the support of a majority of EU member states.

The tariff for PHEVs is expected to adopt a scheme similar to the tariff for electric vehicles that will be implemented in 2024. The amount of the tariff may differ for each manufacturer, depending on their level of cooperation with European authorities. In the previous EV tariff policy, the amount of additional duties ranged from 7.8 to 35.3 percent.

However, a number of Chinese automotive manufacturers seem to have anticipated the potential of the new policy. Many of them have invested in building production facilities in Europe, including BYD which now operates a factory in Hungary and SAIC which is preparing to build a factory in the north of Spain.

In addition, Dongfeng, Chery, Geely, and Leapmotor are also reportedly likely to use existing production facilities in Europe to assemble their vehicles, thereby reducing the impact of the potential imposition of new tariffs.