AutosEU's electric vehicle tariff plan sparks fear among German giants

EU's electric vehicle tariff plan sparks fear among German giants

Images source: © Getty Images | Maja Hitij

8:39 AM EDT, May 10, 2024

The automotive industry has never before been so entwined with global politics. The European Union is debating protective measures against the wave of affordable Chinese electric vehicles, a move that worries German automotive giants concerned about potential retaliation from China.

Chinese-made electric vehicles have already arrived in Europe, offering competitive pricing. For instance, customers can purchase a vehicle showcasing Chinese innovation for approximately $34,000. In response, the European Union is considering introducing tariffs to safeguard its own automotive sector.

"It's very easy to shoot oneself in the foot," warns Olivier Zipse, BMW's managing director, during an investors' meeting. His concern stems from that BMW's electric Mini and iX3, sold in Europe, are manufactured in China. Additionally, with China being the conglomerate's second-largest market—following Europe—a retaliatory move by China could significantly impact BMW. "Our industry does not need protection," Zipse argues.

Ola Källenius, echoing this sentiment, believes that competition from Chinese manufacturers will drive Europe to produce superior cars. Notably, one in three Mercedes sold is to the Chinese market. Thomas Schaefer, managing director of Volkswagen, warned at the Financial Times' "future of the car" summit that retaliation is almost a given in these situations.

Zipse also highlighted another critical concern for manuf acturers: the dependence on components and materials from China essential for battery production, a cornerstone for electric vehicles. "There wouldn’t be even one car in Europe without components from China," Zipse pointed out, emphasizing the interconnectedness of global automotive manufacturing and the complexity of taking protective action without risking essential supply chains.