Too cozy
Beyond politics, the combination of repealing the 2035 legislation and creating breathing room with tariffs would dramatically take the heat off automakers as they ramp up EV production.
“If you make this too cozy for existing automakers who still make the majority of their profits from internal combustion engine vehicles, then you’re going to see a situation where they are increasingly not competitive in other markets in the world,” said Colin McKerracher, head analyst on clean transport at Bloomberg NEF.
Many European manufacturers have already walked back their EV targets, citing high production costs and slowing adoption rates. Volkswagen, whose Chinese joint venture, SAIC, was hit with the highest duty on Wednesday at 38.1 percent, told an automotive conference earlier this year that it will rely more on hybrids to compensate for falling all-electric sales.
What is hindering a wider EV uptake, however, is the availability of affordable models costing €25,000 or less. Chinese companies can fill that gap, thanks to expansive supply chains and low costs, but their European and U.S. competitors have focused on larger models like SUVs that come at a higher price — and generate more profit.
As Europe debates how to move forward, Beijing and Washington are plunging ahead and creating their own EV behemoths. The Biden administration’s decision to slap a 100 percent tariff on made-in-China EVs has left Europe as the most lucrative market destination for the car brands.
Speed bump
The provisional duties erect a speed bump to Chinese automakers, but not a roadblock.
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