Diversion ahead? For Chinese EVs, the road may fork out to India
electric vehicles (EVs) made by Chinese companies now stare at a road bump in Europe as the European Union (EU) last week decided to hike tariffs on Made-in-China EVs. The EU decision follows a scare in the Western world about China flooding it with state-subsidised EVs. The Alliance for American Manufacturing has said that government subsidized Chinese EVs “could end up being an extinction-level event for the U.S.
auto sector". Earlier this year, Tesla CEO Elon Musk told industry analysts Chinese EVs are so good that without trade barriers, “they will pretty much demolish most other car companies in the world.” The US had already quadrupled the tariff on Made-in-China EVs from 25% to 100%.
China accounts for six-in-10 of every EV sold worldwide. This dominance came due to China's sprawling supply chain for the critical technology inside them and huge state subsidies that built the EV ecosystem.
In 2001, Beijing launched an R&D program to develop batteries, motors and other EV-related technologies. This industrial policy, aided by supportive domestic banks, was matched about a decade later with the rollout of generous subsidies encouraging Chinese drivers to buy EVs.
The European Commission, the EU’s executive arm, said the preliminary results of its ongoing investigation into Chinese EV subsidies show that the country's battery electric vehicle “value chain” benefits from «unfair subsidisation» that hurts EU rivals.
It plans to impose provisional tariffs of up to 38.1% on electric vehicles shipped from China. That's on top of the 10% duties for all imported EVs. The commission said it has reached out to Chinese authorities to «explore possible ways to resolve the issues» but if those discussions don't result in an
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