Chinese EV makers suffer setback in Europe as tariffs start

Chinese automakers registered fewer electric cars across Europe in July, as new tariffs amplified the impact of a broader slump in EV sales.

Brands including SAIC Motor Corp.’s MG and BYD Co. accounted for 9.9% of EV registrations in the region, down from 10.2% in July 2023, according to researcher Dataforce. Overall demand for EVs continued to weaken after Germany, Europe’s largest auto market, removed incentives late last year. 

Chinese automakers and their European counterparts that import battery-electric cars into the European Union have been scrambling to adjust to the introduction of new tariffs on July 5 that raised duties on Chinese-made EVs to as high as 48%. 

The provisional levies have stoked trade tensions and led to retaliatory probes — China on Thursday said it found evidence of the dumping of brandy from the EU, though it held off on imposing tariffs for now. The EU’s duties on EVs are set to be made permanent in November, pending the outcome of trade talks between Brussels and Beijing.

The European Commission said state-owned SAIC’s responses to its probe were “found to be highly deficient” and slapped it with the maximum duties.

The MG owner saw a 38% drop-off in European registrations in July from a year earlier, and an even bigger 60% slide from June, according to researcher Jato Dynamics. SAIC pressed more than 13,000 electric MGs into the hands of European dealers during June, ahead of the tariff deadline.  

In all, Chinese firms registered fewer than 14,000 EVs across Europe in July, down from more than 23,000 in June, and a 9.7% decline from July 2023, according to Dataforce.

Chinese carmakers rushed to beat the tariff deadline, said Matthias Schmidt, an independent auto analyst based in Germany. That left them with fewer EVs to sell in July.

BYD doubled its European presence in July from a year earlier, though China’s biggest carmaker posted a 5.5% sequential drop, according to Jato. The company is building plants in Hungary and Turkey that, once operating, will allow it to sidestep the new tariffs. BYD said on Friday that it would take over its German distributor, another step in gaining a foothold in the European market.

Polestar, the Swedish EV maker partly owned by Chinese billionaire Li Shufu, isn’t counted among Chinese brands by Jato, though Dataforce includes it in its market calculations. The company has begun producing its Polestar 3 in the US, while Xpeng Inc., Volkswagen AG’s Chinese partner, told Bloomberg News this month that it’s seeking a European manufacturing site. 

Incentives — or their absence — continue to play a dominant role in EV sales. In Germany, EV sales declined 37% in July and are now down 20% year-to-date, according to the European Automobile Manufacturers’ Association. 

In Belgium and Denmark, where EV incentives remain in place, demand for battery-powered cars continued to grow.

Registrations also rose in the UK in July. The new Labour government is considering whether to join the EU in issuing tariffs, though hasn’t made a final decision.