EU-China EV tariff dispute: Beijing urges automakers to halt expansion in Europe

There is no doubt that China dominates the worldwide market for electric vehicles. However, according to reports, Beijing is ordering businesses to halt their active search for production locations in the region, sign new agreements and generally maintain a low level of activity while discussions on EVs continue.

According to sources, who requested anonymity because the discussions are confidential, state-owned Dongfeng Motor Group has already put plans for potential manufacturing of automobiles in Italy on hold in response to the warnings.

Renault 5 EV is nostalgic in look, mining a design trend that’s been around so long that retro is retro, Photo Credit: BYD

While this is not a strict rule, China’s directive could escalate tensions as the two powers compete for control of the automobile sector. Earlier this month, the EU voted to raise tariffs on electric vehicles (EVs) manufactured in China by up to 45%, alleging that Beijing unfairly subsidizes its carmakers. China has strongly opposed this claim and has now vowed to impose its own tariffs on European dairy, brandy, pork and automobile industries.

According to one source, Beijing is also concerned about Europe’s difficult EV transition and potential overcapacity as a result of low demand for Chinese cars in the market, even though Dongfeng Motor told Italian officials that Rome’s support for EU tariffs was the reason for its change.

This tension escalated when customs duties imposed by the EU increased significantly.

Thus, it can be said that there is high tension between the EU and the Chinese electric vehicle industry.