EU countries offer Chinese electric vehicle manufacturers incentives such as tax exemptions, relaxation of regulations in designated areas and aid for battery factories.
Several European countries, including Hungary, Poland, Italy and Spain, They want to attract Chinese electric vehicle manufacturers to set up factories on their territory. Although the European Commission is wary of the entry of cheaper Chinese electric vehicles into the European car market, Some countries offer aid and subsidies to Chinese factories.
The states They see in the installation of these factories a gain in the labor market and, therefore, a boost for the local economy. Chinese electric vehicle makers such as Chery Automobile, BYD and SAIC Motor are eager to have a second base in Europe and are likely to be tempted by whatever subsidy suits them best.
Chinese electric vehicle manufacturers wanting to open new factories in Europe would benefit from advantages such as tax exemptionsmoney for job creation, fewer regulations in designated areas and aid for the installation of battery factories to further simplify the electric vehicle supply chain. Shipping costs from China to Europe would also be cheaper.
Given the volume of investment by Chinese electric vehicle manufacturers in the European automobile market and its expansion plans, European factories could be a very useful base and launching pad from which to explore new regional markets.
Gianluca Di Loreta, partner at Bain and Company, according to Reuters: “Chinese automakers They know that their cars should be perceived as European if they want to spark interest among European customers. This means producing in Europe.”
Why are Chinese EVs so popular in Europe?
Los Chinese EVs are increasingly popular in Europe why are cheaper than their European counterparts. They have a good range of extras that come as standard. Among them, free recharging for one or two years, dashboard cameras and an extra set of winter tires, among others. Despite their low price, Chinese EVs continue to focus on design and performance, and They have recently improved their safety standards.
The growing appeal of Chinese electric vehicles has led the EU to consider increase tariffs and sanctions to Chinese vehicles to control the flow of imports. Current European tariffs on car imports are around 10%. In the United States, they are around 27.5%.
If this occurs, it is not clear to what extent this measure will be effective, since Chinese electric vehicle manufacturers already operate with a large profit margin.
According to The Guardian newspaper, the Rhodium Group, an independent study provider specialized in China, has stated the following: “Some Chinese manufacturers will be able to continue making comfortable profit margins with the cars they export to Europe thanks to the significant cost advantages they enjoy.
“Tariffs in the range of 40%-50% – arguably even higher for vertically integrated manufacturers like BYD – would likely be necessary to make the European market unattractive to Chinese EV exporters.”
Furthermore, although the possibility of increasing tariffs is being considered to ultimately help European automakers, some countries such as Germany have already warned against it, warning of the high possibility of retaliation from China, as well as the overall impact it would have on domestic automobile markets.
He German Chancellor Olaf Scholz recently declared at a Stellantis event, according to Automotive News Europe: “Isolation and illegal customs barriers, ultimately, only make everything more expensive and impoverish everyone. We do not close our markets to foreign companies, because we do not want that for our companies either.” .
