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Iran's tactical fail leaves a way out of all-out war Meanwhile, the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME), a Beijing-based industry group, said the 13-month investigation launched by the European Union last September against Chinese EV makers is not transparent and is in violation of global trading rules.
In a hearing with the European Commission in Brussels on April 11, CCCME Vice President Shi Yonghong, said he was concerned that the findings of the EU probe of Chinese EV imports would be distorted and unobjective.
Shi said the European Commission had departed from its principle of selecting for study the top Chinese EV makers, such as BYD, Geely and SAIC, and seemed to have purposely focused on three Chinese-owned producers to reach predetermined findings of subsidization.
He said the biased sample selection has tainted the entire investigatory process. He added that the probe was a perfect example of the EU's double standards as it avoided taking any action against the US$400 billion of subsidies granted by the US government and also billions of euros of subsidies granted by the EU to the EV and battery sectors.
A spokesperson of the European Commission said the investigation and its findings would fully respect EU and international obligations. He said the EC will make sure this anti-subsidy investigation is thorough, fair and fact-based.
Impact of tariffsUS Treasury Secretary Janet Yellen, who finished her six-day China trip on April 9, told CNN on Sunday that the US will not take“anything off the table” in response to China's manufacturing capacity, including the possibility of additional tariffs to stop the influx of cheap Chinese goods into the US market.
“We're concerned about the possibility of surges in Chinese exports to our markets in areas where they have a great deal of overcapacity,” She said.
She said she has told Chinese officials that China's overcapacity problem is a concern not only to the US, but also to other countries and regions, such as Europe and Japan, and even to emerging markets including India, Mexico and Brazil.
As the Trump administration impose an extra 25% tariff on Chinese goods on top of the usual 2.5% tariff in 2019, Chinese EV and battery firms found it very difficult to develop their US markets.
They then turned to build factories in Mexico, which signed a free trade agreement with the US and Canada in 2018, trying to evade the extra 25% tariff. But Republican candidate Donald Trump said last month that he will impose a 100% tariff on Chinese cars that are made in Mexico if he wins the presidential election in November.
Now Chinese automakers are accelerating their plans to localize their production capacity in Europe, in case the EU imposes extra tariffs on EVs made in China later this year.
About one in five EVs sold in Europe last year were made in China, according to Transport & Environment (T&E), a Brussels-based non-profit organization. The figure is expected to grow to about 25% in 2024.
More than half of Chinese imports into Europe are still western brands, such as Tesla, Dacia and BMW, T&E says – but Chinese brands, including SAIC's MG, Geely's Polestar and BYD, could reach 11% of the European EV market in 2024 and 20% in 2027, up from about 7.5% last year.
“Tariffs will force carmakers to localize EV production in Europe, and that's a good thing because we want these jobs and skills,” said Julia Poliscanova, senior director for vehicles and e-mobility supply chains at T&E.“But tariffs won't shield legacy carmakers for long.”
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She said a higher tariff should be accompanied by a regulatory push to increase local production of EVs, including electrification targets for company car fleets by 2039, on top of the agreed 100% clean car goal in 2035.
No dumpingAfter European Commission President Ursula Von der Leyen announced a probe into unfair Chinese competition in the EV sector on September 13 last year, German Economic Minister Robert Habeck welcomed the decision.
But then German Chancellor Olaf Scholz said , on September 28, that he was not convinced about the need to impose tariffs on Chinese EVs. He said that, since Germany wants to sell its cars in all places in the world, it should also open its market to foreign firms.
On a visit to China on Monday, he told Chinese students in Shanghai that Germany wants open and fair auto markets. He said Chinese cars will still be in Germany and Europe at some point if there is fair competition with no dumping, overproduction or infringement of copyrights.
According to the MarkLines Data Center, German automakers sold 462,720 vehicles in China last year, up 3.8% from 2022. They accounted for about 17.8% of the Chinese markets.
Chinese brands sold 1.46 million vehicles domestically with a 56.2% market share. Japanese brands sold 382,900 vehicles in China with a 14.7% market share.
Read: China blows off EU turbine probe as an ill wind
Follow Jeff Pao on Twitter: @jeffpao3
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