The first half of 2024 was a challenge for the world’s heavyweight OEMs. Demand for EVs is cooling (but is still warmer than for ICEs), strategies have been retooled and hybrids and hydrogen ICEs are getting another look. The story that dominated the end of the half-year was tariff ping pong between the European Union and China.
In June, the EU busted out with new tariffs – on top of the 10% already in place. A rates are based on the results of four-month investigation into what it considers to be subsidies, and are therefore unfair. Three Chinese OEMs responded to EU request to scrutinize their supply chains and see what helping hands the got for every input. In the end, Brussels settled on an average 21% for those companies that opened their books and 38.1% for those that don’t roll over.
The Chinese were up in arms, and Western carmakers that are trying to cut costs by manufacturing in China then importing cars back to the bloc also protested.
The impact of these tariffs is clear. They’ll dampen Chinese OEMs’ enthusiasm for the EU market, but is unlikely to kill it altogether. Income and employment are at stake. But given the hyper-competitive environment among China’s EV OEMs, it won’t be long before that is minimized. Some analysts argue that it’s the hyper-competition that has kept prices low and car tech high in the cars.
Profit and jobs are at stake in the West, too. BMW, Volkswagen and Tesla manufacture in China, and tariffs will impact on the ability of Western OEMs like BMW and Tesla, which produce EVs on slimmer margins than Chinese firms—to export from their Chinese manufacturing facilities compared to China-based automaker.
Beijing’s response has been to hunt for the EU’s pain point and press hard. The Chinese opted to parlay investigations into European brandy and pork imports to ratchet tensions.
Chinese OEMs may decide to set up shop in Europe and its environs, as demonstrated by a new BYD plant in Turkey. Or they might consider the U.S. market where they’re effectively locked out. In contrast with the EU’s more meticulous examination of the Chinese state’s thumb on the scales, the Biden Administration went all the way to a 100% duty on imported Chinese cars. In fairness, Biden was only carrying on where Trump had left off. Even though the World Trade Organization castigated the U.S., both administrations ignored the WTO’s rules. Besides, carmakers and governments are privately happy with the situation as it makes their own cars more competitive.
Sorry, a technical error occurred and we were unable to log you into your account. We have emailed the problem to our team, and they are looking into the matter. You can reach us at cs@lubesngreases.com.
Click here link to homepage