Chinese EV makers suffer setback in Europe in July after 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’s MG and BYD accounted for 9.9 percent of EV registrations in the region, down from 10.2 percent 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 percent.

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 percent drop-off in European registrations in July from a year earlier, and an even bigger 60 percent 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 companies registered fewer than 14,000 EVs across Europe in July, down from more than 23,000 in June, and a 9.7 percent decline from July 2023, according to Dataforce.

Chinese automakers 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 automaker posted a 5.5 percent 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.

Polestar, the Swedish EV maker partly owned by Chinese billionaire Li Shufu, is not counted among Chinese brands by JATO, though Dataforce includes it in its market calculations.

The company has begun producing its Polestar 3 in the U.S., while Xpeng, Volkswagen Group’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 percent in July and are now down 20 percent year-to-date, according to the European Automobile Manufacturers’ Association.

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

Registrations also rose in the U.K. in July. The new Labour government is considering whether to join the EU in issuing tariffs, though has not made a final decision.