Chinese Electric Car tariffs in Europe backfired BADLY…
So, Europe thought that they could tax Chinese electric cars out of existence. Yeah, Europe’s obviously very concerned. Mercedes-Benz, they’re concerned. The CEO said, “We should be very worried about Chinese electric cars.” Um, so is BMW. So is the Volkswagen Group. So, they thought, well, we’ll strategy here. We’ll put massive taxes on electric cars from China. And it has backfired. I mean, big time. In a stunning bureaucratic backfire, tariffs on Chinese electric cars pushed Chinese car brands towards plug-in hybrids. And the truth is, China’s market share in Europe has actually increased significantly as a result. You wouldn’t think so, but it has. Sales figures for the European market revealed that the very measures put in place to protect local automakers have had the opposite effect. The European Union imposed tariffs of up to 35%. Actually, no. It’s like up to 44% plus 10% tariffs on top of that for just importing the car. And that means in total tariffs of up to 54%. This was designed to protect European brands, to protect the European automotive industry and stop the growth of electric Chinese cars. Early signs suggested that it was working. The tariffs announced um provisionally in July 2024 and introduced in November of that year saw sales of Chinese cars grow by only 13%. So you’d think, right, 13% not too bad, sort of working kind of. But figures tabled by financial analyst Jeffrey suggest that um rather than pushing Chinese brands to establish European production, brands simply moved their focus away from EVs and towards plug-in hybrids and then just started selling lots of them in China. But the funny thing is that even though there are these massive tariffs on Chinese EVs, EV sales for Chinese-made cars in Europe have grown substantially regardless. And now you’ve got Xpang, BYD, Leap Motor, numerous brands that have just basically gone, well, we’ll set up assembly factories in Europe or places like Turkey and we’ll simply assemble the cars in Europe and you know, we’ve pretty much already made the cars in China. We’ll just send those parts to Europe, assemble them there, and then we won’t have to pay any tariffs at all. Chinese vehicle sales are expected to hit 700,000 in the UK and Europe in 2025. That’s up from 408,000 in 2024. So, they’ve gone from 400,000 to 700,000 in 12 months. It clearly hasn’t worked at all. Yeah. Industry sources say that fewer than 20,000 of those will come from European assembly plants. Over the next few years, though, that will change drastically. More and more of these vehicles will simply be assembled in Europe and avoid any tariffs at all. The European Union decision to target a specific technology in imposing extra tariffs for Chinese automakers was ill- fated. According to Philip Hushwa, management director at Jeffre. Imported vehicles still attract a 10% import levy. So Tesla doesn’t have to pay these tariffs on its Chinese EVs that it makes in China. But it does have to pay the 10% import levy that all manufacturers, including American brands, have to pay regardless of being petrol, EV, hybrid, or plug-in hybrid or anything on cars that don’t attract the well the massive tariffs. That small additional duty has been easily offset by Chinese brands building cars in China. Jeffre estimates production costs in China are 30% lower than those in Europe. But the Volkswagen group says Jeffre is wrong. And actually they say it’s 50% cheaper to make electric cars in China than in Germany. And I think the Volkswagen group would know better than Jeffre who are consultants because they actually have the numbers themselves. They make cars in China with a joint venture partner and they make cars in Germany. And a 50% cost difference is enormous. So you can see why it’s um it’s not going to work long term. the manufacturers. Even the Volkswagen group says that it’s going to start selling Chinese-made electric cars in Europe. It’s going to start and it’s actually applied to get an exemption on tariffs on its joint venture Chinese branded EVs that are made in China. It’s got to import them to Europe and it’s asking for exemptions from these rules. So, this kind of an interesting situation here. However, even Chinese-built EVs which incur both the 10% import tariff and the 30% tariff, the 35% tariff depending on the brand. I mean, BAD is an extra 20, I think it’s 18% for BOD. Um, MG is about 40%. So, different, the numbers are different, but even with these tariffs, these manufacturers, right, they have a a decent margin and are still remaining competitive in Europe. So, the tariffs haven’t been enough. Europe’s selective protection levy aimed directly at Chinese-built EVs rather than the US approach of applying tariffs to all Chinese source vehicles led to a shift in the way that Chinese brands structured their lineups in Europe. From January to October 2025, electric vehicles represented around 34% of overall sales. Over the same period in 2024, the mix was higher at 44%. To avoid a sales slump from the higher tariffs, Chinese brands instead put their efforts behind the sales of hybrid and plug-in hybrid models. In a perfect storm of conditions, China’s home market price wars continue to push the cost of production in China lower. So, it’s costing these companies less to make cars. Their factories are running below capacity in China because legacy automakers are being shattered there. And that means the cost of absorbing Europe’s levies is lower than that of setting up new production facilities in Europe using European supply chains. Only if the EU would impose a significant local content threshold below which all Chinese imports pay a substantial extra tariff no matter their power trains. Would Chinese OEMs be forced to open plants in Europe? Said Hushwa of the market conditions. Now there is another thing that Chinese brands have been doing. Uh they’re getting Magnus based in Austria to assemble their cars for them. So they Magnusier has been there for decades. It’s already set up. They do this for other manufacturers. They make cars, contract manufacturing for Jaguar and other brands. And Magnus is like, well, no, not a problem at all. We can easily assemble your cars here. Just send the stuff to us. Send the um you know, the chassis as one big piece. We’ll stuck stick all the parts together. It’s really not actually that complicated. and then you can avoid paying these tariffs. So some brands are doing it that way as well. Other brands like BD are building factories there in Europe and other brands like CHL are also building their own battery factories as well. So yeah, I mean Europe hasn’t slowed down the Chinese, I don’t know if you call it invasion, but the Chinese partial takeover of the European auto market, but it, you know, they might have slowed it down a little bit, but they haven’t really done anything to change the trajectory and it’s still heading in one direction. I mean, look at the build car sales increase in Europe this year has been about 300%. Xpang, they’re up about 250% in Europe. So in spite of these tariffs, Chinese car brands are still massively increasing their sales on the continent. And this is what European lawmakers were trying to prevent. It didn’t work.
Chinese Electric Car tariffs in Europe backfired BADLY…
Europe’s tariffs on Chinese electric cars are backfiring as prices stay competitive, local brands face margin pressure, and EV adoption risks slowing. Instead of protecting the industry, the move is exposing Europe’s cost disadvantage and dependence on China’s EV supply chain.
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