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EU imposes tariffs on Chinese electric vehicles; Nio considers increasing prices.

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European Union imposes tariffs on Chinese electric cars; Nio contemplates increasing prices

On Thursday, the European Union finalized its decision to raise duties on electric vehicles coming from China, prompting one auto manufacturer to issue cautions that it might need to boost prices in response.

The European Commission, as the executive branch of the EU, declared its intentions for these tariffs back in June following an investigation that found Chinese electric vehicle producers to be benefiting from what they deemed as “unfair” subsidies.

European regulators confirmed on Thursday that these charges, adjusted to fall between 17.4% and 37.6%, will officially take effect on Friday, affecting automakers from the likes of the Chinese giant BYD to potentially even European brands with manufacturing facilities in China and the American titan Tesla, which operates a factory in Shanghai.

Chinese electric vehicle manufacturers respond to EU tariffs

Chinese automakers have been aggressively expanding into the European market with competitively priced offerings, challenging top regional automakers who have been slower in the electric vehicle sector. The European Commission claims that these automakers have unduly benefitted from what they described as “unfair subsidization.”

When the EU first announced the tariffs, Tesla anticipated increasing prices for its Model 3 vehicle in Europe. Although the specific tariff level for Tesla remains unspecified, the EU indicated that the U.S. automaker might face an individually calculated duty rate.

Chinese electric vehicle manufacturer Nio revealed that while it is currently maintaining its prices for cars sold in Europe, the possibility of adjusting prices in response to the imposed tariffs cannot be ruled out. Another Chinese EV newcomer, Xpeng, stated that customers awaiting car deliveries or placing new orders before the tariffs take effect will be shielded from potential price increases. Xpeng did not comment on the likelihood of raising prices due to the levies.

Geely declined to provide a statement when reached for comment.

EU-China negotiations amidst tariff implementations

The provisional tariffs set to be enforced on Friday will last for four months. During this period, EU member states will vote on implementing “definitive duties” that would span a five-year period.

Chinese and EU officials have engaged in multiple rounds of negotiations regarding the tariffs. In June, Beijing criticized the EU’s tariff imposition as a “protectionist act.” The Chinese Commerce Ministry spokesperson expressed hopes for a speedy and mutually agreeable solution through sincere discussions based on rules and reality.

Chinese electric vehicle makers’ commitment to the European market

Chinese electric vehicle manufacturers reiterated their dedication to the European market, emphasizing their expansion over recent years. Xpeng affirmed its commitment to providing high-quality innovative products to the growing European customer base and expressed intentions to make long-term investments in these markets. The company is actively assessing the feasibility of establishing local production facilities in Europe to potentially mitigate some of the tariffs.

BYD, a prominent EV manufacturer in China and globally, disclosed plans to open its first European factory in Hungary without specifying a concrete timeline.

Nio demonstrated its full commitment to the European market, advocating for fostering competition and consumer interest while aiming to reach a resolution with the EU before definitive measures are enforced in November 2024.

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