Fitch: EU Tariffs on China’s EVs Will Not Affect European Market

The European Commission's provisional tariffs on imports of Chinese electric vehicles in the EU are not expected to materially impact the European market, due to the slow uptake of EVs, Fitch Ratings said on Friday.

However, a potential Chinese retaliation would be key to the fortunes of European carmakers, especially of the German auto manufacturers, according to the rating agency.

Earlier this week, the European Commission announced provisional tariffs on Chinese EVs in Europe, ranging from 17.4% for BYD to 38.1% for SAIC and all other BEV producers that haven't cooperated with the EU in its investigation into illegal subsidies for the Chinese manufacturers.

These tariffs come on top of a standard 10% duty on vehicles imported into the EU.

The EU launched in October 2023 anti-subsidy investigations into EU imports of EVs from China to determine whether the value chains in China benefit from illegal subsidies.

This week, the Commission "provisionally concluded that the battery electric vehicles (BEV) value chain in China benefits from unfair subsidization, which is causing a threat of economic injury to EU BEV producers." 

Commenting on the tariffs, China's foreign ministry spokesperson Lin Jian said on Thursday "There are principles that China must defend, that is, the WTO rules and market principles. There are also interests that China must safeguard, that is, the lawful rights and interests of China's EV industry and enterprises. With this in mind, we will take all measures necessary."

In case of a Chinese retaliation, particularly with broader measures covering other types of vehicles or even other industrial sectors, German automakers would be most affected, Fitch Ratings said today.

"The impact of potential broader measures would weigh on German automakers' margins and cash flow generation," the rating agency said.

"However, we expect their existing headroom to help absorb these pressures without their ratings being affected."

By Charles Kennedy for Oilprice.com

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