CCCEU Statement on calling for the EU and China to properly resolve battery electric vehicles frictions through consultations

August 9, 2024, Brussels

Since the EU imposed provisional countervailing duties on battery electric vehicles (BEVs) imported from China on July 5th, China Chamber of Commerce to the EU (CCCEU) has been closely following the developments of the BEV case. The CCCEU welcomes dozens rounds of technical consultations held between China and the EU, and calls on both sides to resolve the BEV trade frictions through dialogue and consultations, in a view to reaching a cooperative rather than protectionist solution and avoid escalation of the situation. The Chamber reiterates that imposing high tariffs on Chinese BEVs would severely hinder the EU's climate goals, industrial competitiveness, and China-EU cooperation in the automotive industry.

Transition to vehicle electrification is crucial for the EU to achieve its climate goals. The International Energy Agency estimates that 50% to 95% of the global car sales will be electric vehicles (EVs) in 2035. Meanwhile, as passenger cars produce 16% of its carbon dioxide emissions, EU adopted a ban on the sale of new petrol and diesel cars from 2035. However, in 2023, BEVs only accounted for 14.6% of all new cars sold and merely 1.7% of passenger cars stock in the EU market. It is clear that EU's transition to vehicle electrification needs to be accelerated in no time. To the contrary, imposing high tariffs on Chinese BEVs will only raise their price, diminish consumer demand, and consequently slow down EU's pace of green transition and climate neutrality.

EU's transition to vehicle electrification calls for full competition rather than protectionism. The legacy of success the European auto industry has inherited is automaker's full competition and continuous innovation inspired by competition. Current issues encountered by European automakers during the electrification process are common challenges and opportunities facing global automakers, and the way out is also the same, which is full competition and continuous innovation. The history of the global auto industry has shown repeatedly that protectionism can only bring high cost of protection and make companies gradually losing competitiveness under the umbrella of tariffs. Therefore, imposing high tariffs on Chinese BEVs mistakenly blames foreign competition for one's domestic industrial headaches. It will only depress effective competition and encourage lack of improvement, which deviates from the real path to solution.

The auto industry is inherently internationalized, and the smooth electrification in the EU auto industry is indispensable from extensive cooperation with their Chinese counterpart in trade, investment, technology, and supply chains. Labeling Chinese BEV companies as "subsidized" would significantly increase the risk of their investment and operations in the EU to be investigated under the Foreign Subsidies Regulation. This would severely undermine the in-depth cooperation between Chinese and EU EV sectors, with spillovers far beyond trade. According to a survey  conducted by the CCCEU and CEIS on the impact of anti-subsidy investigation into Chinese BEVs, 82% of respondents reported a significant decline of confidence in investing in Europe, 67% felt their brand reputation was negatively impacted, 83% reported concerns from their European partners, resulting in collaboration delays and reduced cooperation, and 72% reported worries among their local European staff about job prospects.

The CCCEU notes that recently several European automakers have voiced opposition to tariffs on Chinese BEVs and suggested resolving trade frictions through dialogue and consultations. The CCCEU again calls for further dialogue and consultations between China and the EU to reach a mutually acceptable solution at an early date that complies with WTO rules and meets the expectations of businesses and markets of both sides, therefore effectively resolve trade frictions, shore up confidence and stabilize expectations in trade and investment cooperation between Chinese and EU enterprises, and jointly drive the transition to vehicle electrification and achieve climate neutrality targets.