Chinese Electric Vehicle Sales Drop Sharply in Europe Amid EU Tariff Uncertainty

In August 2024, Chinese electric vehicle (EV) manufacturers experienced a significant decline in sales across Europe, marking the lowest figures in the past 18 months.

According to Bloomberg, registrations of Chinese electric cars fell by 48% compared to the same period last year, leading to a two-month consecutive drop in market share for Chinese brands.

One of the key players affected by this downturn is MG, a historic British marque now owned by China’s SAIC Motor. Once a dominant force in the European market, MG was overtaken by its Chinese competitor, BYD Co., as the top Chinese EV brand in Europe. The drop in MG’s sales—down 65% in August—has been attributed to uncertainty surrounding potential tariffs from the European Union on Chinese imports, a factor highlighted by Felipe Muñoz, senior analyst at Jato Dynamics. Muñoz also pointed out that MG had been focusing more on hybrid and plug-in hybrid segments rather than fully electric vehicles, a shift which may have contributed to the brand’s diminishing presence in the electric car market.

MG has been one of the most successful Chinese automotive brands in Europe, leveraging its long-standing brand recognition to regain ground over the past decade, while transitioning to electric mobility. However, in July 2024, its parent company, SAIC, was hit with an additional 38% tariff on its electric vehicles— the highest imposed by the EU on any car manufacturer.

BYD Co., which entered the European market more recently, has taken advantage of MG’s decline. In August, the company saw a 19% year-on-year increase in EV registrations, continuing its expansion across the continent. This growth comes as the industry grapples with the EU’s proposed tariffs, which are expected to affect all EVs imported from China. This includes vehicles made by non-Chinese automakers like BMW, Stellantis, and Tesla, which have significant manufacturing operations in China.

The tariffs are part of the EU’s broader efforts to address concerns over China’s dominance in the EV market and its potential implications for European manufacturers. The final decision on the additional duties is expected by November 2024, following a vote by EU member states. In the meantime, negotiations between Brussels and Beijing are ongoing, with both sides engaging in intense lobbying efforts.

The decline in Chinese EV sales has been compounded by a general slowdown in demand for electric vehicles across Europe. Registration numbers for EVs have dropped by 5.5% in the first eight months of 2024, with major markets such as Germany pulling back on consumer incentives for EV purchases. These shifts in the market have created an environment of uncertainty for carmakers operating in the region.

European automakers have responded by urging Brussels to reassess key climate policies, particularly the 2025 fleet emissions targets. These targets could result in billions of euros in fines for manufacturers who fail to meet the stringent requirements. The combination of reduced consumer incentives, falling demand, and the potential financial burden of emissions fines has placed significant pressure on the industry, prompting calls for regulatory adjustments.

Interestingly, the impact of the proposed EU tariffs has not been uniform across Europe. In markets like the UK and Norway, which have opted not to follow the EU’s approach, registrations of Chinese-made EVs actually rose in August. This divergence highlights the complexity of the European market and the challenges that come with applying broad trade measures across diverse regions.

The EU’s decision to consider tariffs on Chinese imports is rooted in concerns about competition and the dominance of China in the global EV market. Chinese automakers, backed by state subsidies and a massive domestic market, have been able to produce electric vehicles at a lower cost than many European manufacturers. This price advantage has allowed Chinese brands to quickly gain a foothold in Europe, raising concerns among EU policymakers about the long-term impact on the region’s automotive industry.

In response, the EU has taken steps to protect its own car manufacturers, with the proposed tariffs being just one of several measures aimed at levelling the playing field. The outcome of these policies will likely shape the future of the European electric vehicle market, determining whether Chinese brands can continue to expand or whether they will face greater obstacles in one of the world’s most important automotive regions.

Read also:

Escalation of Trade War: EU to Impose 38% Tariffs on Chinese Electric Vehicles

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