Hyundai Motor Company and Kia ‘No volume of electric vehicles from China to Europe’… ‘Up to 35.3%p’ damage from EU countervailing duties
Tesla, BMW, and Volkswagen are also hit with tariffs… “Subsidies must be given up on local production in Europe.”
Kona Electric was selected in the ‘Best small electric SUV for families’ category at the ‘2024 What Car? Car of the Year Awards’, a renowned British car award show. Done. 2024.1.21/News 1″/>
On the 4th (local time), the European Union (EU) decided to impose a ‘confirmed’ countervailing duty of up to 35.3 percentage points (p) on Chinese electric vehicles (BEVs) for the next five years through a vote by member states. Hyundai Motors (005380) and Kia (000270), which are struggling in the European market this year due to the slowdown in demand for electric vehicles (chasm), are expected to benefit from the worsening price competitiveness of their competitors.
According to the industry on the 6th, unlike Chinese and European electric vehicle companies, Hyundai Motor Company and Kia Motors were excluded from the EU’s imposition of countervailing tariffs on Chinese electric vehicles. This is because none of the electric vehicles produced in China by Hyundai Motors and Kia are exported to Europe. Among the two companies’ vehicles, the only electric vehicle produced in China is Kia’s EV5, made at the Yancheng plant. Most of them are sold for the Chinese domestic market and have not been released in Europe.
Currently, the most popular electric vehicles from Hyundai and Kia in Europe are the Kona Electric and Niro EV, respectively. All are produced locally in Europe or exported from Korea. According to market research firm EV-Volumes, as of July, Kona Electric ranked 18th and Niro EV ranked 13th in sales by vehicle type in the European electric vehicle (BEV + PHEV combined) market. The Kona sold in Europe is produced at Hyundai Motor Company’s Czech plant, and the Niro is produced at Kia’s Hwaseong plant. Through this, Hyundai Motors and Kia maintain 8th and 9th place in sales by brand in the European electric vehicle (BEV) market.
On the other hand, not only China but also some electric vehicle companies in Europe and the United States have been hit by this ‘tariff bomb’. The European Commission, which launched an anti-dumping investigation into Chinese electric vehicles in October last year, determined that the local industry was suffering damage due to electric vehicles being exported at low prices due to the Chinese government’s subsidies. Based on this, Chinese companies such as BYD, Geely, and SAIC, along with foreign companies such as Volkswagen, BMW (Germany), Volvo (Sweden), and Tesla (USA), which have electric vehicle factories in China, Companies are also imposing ‘provisional’ countervailing duties with a four-month sunset date starting July 4th.
Just like the provisional countervailing tariffs, the confirmed countervailing duties that were voted on this time will also be differentially imposed on each company depending on their cooperation with the Commission’s investigation and the extent to which they receive subsidies from the Chinese government. For individual companies, the final offset tax was set in the following order: Tesla 7.8%p, BYD 17%p, Geely 18.8%p, and SAIC 35.3%p. △Companies that cooperated with other investigations will face a confirmed countervailing duty of 20.7%p △Companies that did not cooperate with the investigation will face a confirmed countervailing duty of 35.3%p, with Volkswagen and BMW falling into the former category. The same applies to Volvo’s majority shareholder, Geely.
If the confirmed countervailing tariff is implemented as early as the 31st, a countervailing tariff of 7.8 to 35.3% points will be added to the basic tariff of 10% applied to all imported cars, making the final tariff for Chinese electric vehicles 17.8 to 45.3% for five years. Electric vehicles that fall into this category are bound to lose their price competitiveness. Kang Yu-deok, a professor of EU convergence at Hankuk University of Foreign Studies, said, “Chinese electric vehicles have been exported at very low prices, so it has been difficult for Korean companies to catch up with them despite their outstanding technology,” adding, “The EU’s decision is a good basis for the Korean automobile industry to increase exports.” “He evaluated.
In fact, since the implementation of the provisional countervailing tariff, Chinese electric vehicle companies’ sales in Europe have been cut in half in just two months. Last September, market research firm Data Force reported that Chinese electric vehicle companies’ combined share of the European electric vehicle (BEV) market peaked at 11.1% in June, then declined for two consecutive months to 9.8% in July and 7.7% in August, falling for the first time in 18 months. It was calculated that the lowest was recorded. In particular, the number of newly registered Chinese electric vehicles in August was only 14,843, a 47% decrease compared to the same period last year. The provisional countervailing tariff rate currently in effect is 17.4~37.6%p, which is higher than the confirmed countervailing tariff rate (7.8~35.3%p), but for most companies except Tesla, the difference between the provisional and final tariff rates is minimal.
However, China and the EU Commission have decided to continue behind-the-scenes negotiations until the official publication of the final countervailing tariff scheduled for the 30th, so there is still room for the final tariff rate to be lowered. There are also concerns that local production by Chinese electric vehicle companies in Europe will begin in earnest. On the 18th of last month, Belgian daily newspaper De Tait, citing sources, reported that Nio was considering purchasing the Audi electric car factory in Brussels, Belgium. Around the same time, Leap Motor announced that it would produce its compact electric vehicle T03 at the Stellantis plant in Tych, Poland within the second half of this year.
Kang Jun-young, a professor of Chinese studies at Hankuk University of Foreign Studies, said, “As China’s excessive electric vehicle subsidies and overproduction have become grounds for imposing countervailing duties, the Chinese government and industry will show good faith in adjusting electric vehicle subsidies and production in the future, raising the EU’s confirmed countervailing tariff upper limit to the mid-20% range.” “It can be lowered to 100,000 units,” he predicted. Regarding the local production strategy in Europe, he analyzed, “We will have to worry about price competitiveness as we have to give up subsidies from the Chinese government and have to deal with Europe’s high labor costs.”
(Seoul = News 1)
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2024-10-06 07:59:48