China has been accused of dumping cheap electric cars on EU countries. But poor sales, price wars and tariff threats have prompted a mood change among some Chinese auto producers.
European policymakers warned a few months ago that the continent was being flooded with cheap Chinese electric vehicles. They accused Beijing of backing major production overcapacity to allow China’s automakers to grow their share of the global EV market.
The European Commission, the EU’s executive arm, launched an anti-subsidy probe into the oversupply issue late last year and warned China’s EV makers that they could face a new import tariff to offset what Brussels said was unfair competition for European carmakers.
The United States is due to levy a 100% import tax on Chinese-made electric cars, up from the current 25%, which will effectively keep Chinese automakers out of the US market. The EU currently levies a 10% tariff.
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But if the threat from Chinese automakers is so large, why did Great Wall Motor, China’s seventh largest car manufacturer, announce last week it was closing its European headquarters in Munich, southern Germany, due to disappointing sales?
The decision sparked speculation about China’s ability to compete in the European automotive market and whether the canceled plans were part of Beijing’s retaliation against possible EU tariffs or purely for economic reasons.
The lack of traction for Chinese automakers in Europe is made worse when you consider that MG, which has been owned by China’s state-owned SAIC Motor since 2007, is still widely perceived as a British brand.
Separate car tracking data of imports rather than sales, reported in the Financial Times, showed that 20% of all electric vehicle deliveries to Europe in the first four months of the year were made in China.
The closure of the Munich headquarters is a major setback for Great Wall, which had previously sought to build its own factory in Europe as part of huge expansion plans for the continent.
Stellantis, the auto giant formed out of Fiat and Peugeot-owner PSA, said last month it had agreed on a joint venture with Chinese carmaker Leapmotor to sell its electric vehicles in Europe.
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