German carmakers warn EU tariffs on Chinese EVs may backlash
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China represents BMW's second-largest market after Europe, accounting for nearly 32% of sales in the first quarter.
On Wednesday, top executives at BMW and Volkswagen alerted against imposing EU import duties on electric vehicles from Chinese automakers, stating it could tip over the bloc's Green Deal plan and harm automakers that import cars made in China.
The European Commission, responsible for overseeing trade policy in the 27-nation European Union, launched an investigation in October into whether fully-electric cars manufactured in China were receiving distortive subsidies and warranted extra tariffs.
BMW imports the made in China Mini EVs and the iX3 into Europe.
Europe's biggest carmaker Volkswagen which also heavily relies on China, warned that potential duties generally carried a certain risk.
Like its German rivals Volkswagen and Mercedes-Benz, BMW is also heavily reliant on revenues from its Chinese business. China represents BMW's second-largest market after Europe, accounting for nearly 32% of sales in the first quarter.
In March, the Commission began registering Chinese EV imports for customs, implying that they could face tariffs if the trade investigation concludes they are unfairly subsidised.
November will see the end of the investigation although we might have some interim duties imposed by July. Thus, a summary of proposed provisional duties is expected to be published by Brussels on June 5 and implementation should take place by July 4.
The President of European Commission Ursula von der Leyen, highlighted in Berlin that it was important to avoid China flooding the region market with subsidised electric vehicles.
On Monday, French President Emmanuel Macron and von der Leyen asked Chinese President Xi Jinping to seek for more equal trade relations between his country and Europe.
Imposing tariffs could have unintended consequences especially as new EU CO2 emission standards with an increase in EVs reliant on Chinese battery materials become effective next year. This would jeopardise their industrial strategy for leading in carbon emissions cuts as well as technology development.
This situation highlights the challenges that the policymakers and industry stakeholders are facing while attempting to balance trade interests, sustainability goals, and industrial competitiveness in the global automotive sector.
To reach upon a conclusion that addresses these concerns while also promoting fair competition and bearing in mind the environmental sustainability will be crucial moving forward.
(With inputs from Reuters)