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A quarter of electric vehicles sold in the EU this year will be made in China, as the country’s new entrants continue to take sales from local rivals, according to analysis from policy group Transport & Environment.
About 19.5 per cent of battery cars sold in the bloc last year were manufactured in China, according to the company’s research, owing to rising European sales of Chinese-owned brands such as MG and BYD and factors such as US group Tesla using its Shanghai factory to supply parts of the European market.
That percentage will rise to 25.3 per cent in 2024, according to T&E, as Chinese domestic manufacturers continue to take market share from established European brands across the continent.
While many western manufacturers including Tesla, BMW and Renault make electric cars in China that they import to Europe, Chinese-branded EVs alone are set to account for 11 per cent of the EU’s electric car market this year, rising to 20 per cent by 2027. Chinese brands such as BYD have already risen from 0.4 per cent of the European EV market in 2019 to 8 per cent of sales last year.
The findings come as Brussels finalises a probe into whether local subsidies have helped electric cars made in China undercut European-made models — an investigation widely expected to lead to an increase in tariffs on EVs coming in from China.
Carmakers such as Renault and Stellantis have warned that a wave of cheaper Chinese models will undercut those produced by European companies.
A 25 per cent tariff — compared with 10 per cent at present — could raise up to €6bn a year for the European Commission, and would “make EU cars competitive with EVs made in China,” the study suggested.
In particular, Chinese-made medium-sized sedans and SUVs — the largest and most profitable segments of the car market — would become more expensive than their European equivalents if manufacturers passed through the higher tariffs, it found. This is likely to drive more local manufacturing by Chinese groups, it added.
“Tariffs will force carmakers to localise EV production in Europe, and that’s a good thing because we want these jobs and skills,” said Julia Poliscanova, policy director at T&E. “But tariffs won’t shield legacy carmakers for long. Chinese companies will build factories in Europe and when that happens our car industry needs to be ready.”
China’s BYD is already building a new factory in Hungary that it expects to begin producing EVs at the end of next year. The company has said it wants to become one of the largest European EV brands by the end of the decade, and to account for one in ten battery cars sold in the region by 2030.
However, higher European tariffs on imported EVs also risk catching Tesla, BMW and Renault’s Dacia brand, which all sell battery models in Europe that are manufactured in China, T&E added.
And many of the Chinese companies already sell EVs in their home market at a fraction of the price charged in Europe — leading analysts to suggest that they would be able to absorb higher tariffs and still be able to make profits on the models.
Already, EVs from Chinese brands sold in Europe are up to 28 per cent cheaper than those from European nameplates.
BYD’s European boss Michael Shu told the Financial Times last month that local subsidies were less important than “technology” and “efficiency” in making its vehicles cheaper.
“It’s because we invested in this technology much earlier, and much more, than competitors. It’s not because of the subsidy.”
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