EU Imposes New Tariffs on Chinese EVs

Implications for Investors

The European Union has announced a significant shift in its trade policy towards Chinese electric vehicles (EVs). On June 12, 2024, the EU declared it would impose additional tariffs of up to 38% on EVs imported from China, citing the need to protect regional manufacturers from unfair competition.

We’ve decided to short BYD, given this development. This is reflected in our Transition Megatrend Strategy.

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Key Points:

1. Tariff Rates:

- New tariffs range from 17.4% to 38.1% for major Chinese manufacturers like BYD, Geely, and SAIC.

- Other automakers, including European companies with Chinese operations, face tariffs of 21% or 38.1%.

- These are on top of the existing 10% duties.

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2. Implementation:

- The new tariffs are preliminary and will take effect on July 4, 2024.

- Rates were calculated based on the level of cooperation with European officials during their investigation.

3. Global Context:

- This move follows a similar action by the U.S., where President Biden recently quadrupled tariffs on Chinese EVs to 100%.

- It reflects growing concerns about Chinese green tech products flooding global markets.

4. Industry Impact:

- The tariffs aim to level the playing field for European automakers struggling to compete with Chinese EV manufacturers' lower cost bases.

- However, European carmakers with significant Chinese operations may also be affected.

5. Market Reactions:

- Some European automakers have criticized the move, fearing potential retaliation from China.

- Concerns exist about price increases across the EV market and a potential drop in demand for battery-powered cars.

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