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A quarter of electric vehicles sold in the EU this year will be produced in China, as the country’s new entrants continue to take sales away from local rivals, according to analysis by policy group Transport and Environment.
According to the company’s research, about 19.5% of battery-powered cars sold in the bloc last year were made in China, due to rising European sales of Chinese-owned brands such as MG and BYD and factors such as the US group Tesla which uses its Shanghai factory. to supply parts of the European market.
According to T&E, that percentage will rise to 25.3% in 2024, as domestic Chinese manufacturers continue to take market share away from established European brands across the continent.
While many Western manufacturers, including Tesla, BMW and Renault, produce electric cars in China and then import them to Europe, Chinese-branded electric vehicles alone will account for 11% of the EU electric car market this year, reaching 20% by 2027. Chinese brands like BYD have already gone from 0.4% of the European EV market in 2019 to 8% of sales last year.
The findings come as Brussels finalizes an investigation into whether local subsidies have helped Chinese-made electric cars undercut European-made models – an investigation widely expected to lead to increased tariffs on electric vehicles from China.
Carmakers such as Renault and Stellantis have warned that a wave of cheaper Chinese models will undercut those produced by European firms.
A 25% tariff – up from the current 10% – could raise up to 6 billion euros a year for the European Commission and “would make European cars competitive with electric vehicles made in China”, the study suggests.
In particular, it was found that Chinese-made mid-size sedans and SUVs – the largest and most profitable segments of the auto market – would become more expensive than their European equivalents if manufacturers go through higher tariffs. This will likely encourage more local production by Chinese groups, he added.
“The tariffs will force automakers to locate electric vehicle 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 protect traditional automakers for long. Chinese companies will build factories in Europe and when that happens our automotive industry will have to be ready.”
China’s BYD is already building a new factory in Hungary that plans to start producing electric vehicles late next year. The company said it aims to become one of Europe’s largest electric vehicle brands by the end of the decade and account for one in ten battery-powered cars sold in the region by 2030.
However, higher European tariffs on imported electric vehicles also risk hitting Tesla, BMW and Renault’s Dacia brand, all of which sell battery models in Europe made in China, T&E added.
And many Chinese companies already sell electric vehicles in their home market at a fraction of the price charged in Europe, leading analysts to suggest they would be able to absorb higher tariffs and still profit from the models.
Electric vehicles from Chinese brands sold in Europe are already up to 28% cheaper than those with European license plates.
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 the competition. It’s not because of the subsidy.”