China And The European Union Agree On Dialogue Regarding China's New EV Tariff

BYD is the official sponsor of the 2024 European Cup. (Doc. BYD)

JAKARTA Nearly two weeks of tensions between China and the European Union have escalated over the investigation of China's EV subsidy in Europe and additional battery electric vehicle (BEV) import duties from China, and this policy will take effect from July 4.

Now, China and the European Union have agreed to start a dialogue regarding the investigation into electric vehicle subsidies (EVs) from China following the announcement of the interim rate. Reported by CnEVPost, June 24, a dialogue agreement was reached after China's Minister of Trade, Wang Wentao, held a video conversation with the Executive Vice President of the European Commission, Valdis Dombrovskis, on June 22.

A brief statement on the Chinese Ministry of Trade's website also revealed that both parties agreed to initiate consultations on the European Union's anti-subsidy investigation into China's EV.

Earlier, a spokesman for China's Ministry of Trade stated that China was deeply concerned and deeply dissatisfied, as well as the Chinese industry felt disappointed and strongly opposed to this action.

China urged the EU to immediately correct wrong practices and deal with economic and trade friction through dialogue and consultation, the spokesman added.

Previously, the EU had imposed a 10 percent tariff on imported BEVs from China. In the newly announced interim rate, various car companies face different rates. BYD, Geely, and SAIC, which are sampled and in collaboration with the investigation, will be subject to an additional rate of 17.4 percent, 20 percent, and 38.1 percent, respectively.

Other Chinese BEV manufacturers who cooperate in the investigation but are not sampled will pay a weighted average fee of 21 percent, including Nio and Xpeng which fall into this category. All other BEV manufacturers in China who do not cooperate in the investigation will be subject to a residual fee of 38.1 percent.

Obviously with the rules above, China's EV industry faces major challenges in the European market. Further development of these negotiations will be an important determinant for the future of EV trade between China and the European Union.