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2023 m. birželio 20 d., antradienis

Anti-dumping duties on e-cars: The European car industry has a price problem

“Convincing e-cars from China are pushing their way onto the European market for little money. In the EU, tariffs are already being discussed to protect the local car industry.

The EU Commission could use its anti-dumping instruments against the import of cheap electric cars from China. The rapid increase in imports is becoming a problem for its own industry, Internal Market Commissioner Thierry Breton told Politico. The responsible Vice General Director for Trade, Denis Redonnet, is therefore considering initiating proceedings against suppliers whom he can accuse of selling at prices that are too low. A spokeswoman for the EU Commission declined to comment.

The French government in particular is putting pressure on the Commission, according to Brussels. Paris fears competition for its automakers Stellantis and Renault. In French government circles, however, this is contradicted: "We have not pushed for a procedure in a specific case," it says there. The Germany's federal government is also publicly braking. A spokesman for Economics Minister Robert Habeck referred to the EU regulations for anti-dumping procedures, which provide for "regulated decision-making and implementation procedures". The EU modernized its methodology in 2017 specifically because of the challenges posed by China's state capitalism.

Without well-founded complaints from the European manufacturers, the General Directorate for Trade will hardly initiate proceedings against the Chinese manufacturers. The chairman of the trade committee in the European Parliament, Bernd Lange, sees "currently no sufficient indications. A large part of the added value happens through the batteries and they are used almost identically by European manufacturers," said the SPD politician. In addition, there are hardly any reliable figures that the prices for Chinese electric vehicles are significantly lower than those of European providers. And these are not yet widespread in the European market.

France as gateway

Industry observers, on the other hand, report that Chinese suppliers of e-cars have been targeting the French market for about a year or two. Above all, volume manufacturers with brands such as Peugeot, Renault, Fiat and Seat registered that Chinese manufacturers were calling for "competitive prices". The MG4 Electric - a family-friendly four-seater from the Chinese manufacturer SAIC with a range of over 400 kilometers - is sold in France for prices at which only the smaller Renault Zoe is available there. The comparable fully electric Mégane from Renault costs 5,000 to 10,000 euros more. Stellantis boss Carlos Tavares has already warned of a "terrible fight" with the Chinese competition and called for help from the state against their aggressive prices.

The French government is already discussing plans to change e-car subsidies. According to this, the premium of up to 6,000 euros will only be paid in future if, for example, the steel was processed using sustainable methods and the electricity used to manufacture the car demonstrably had a low CO footprint. There should also be ecological requirements for battery production. It's about not openly discriminating against Chinese-made cars and at the same time rewarding the ecologically more demanding methods of European manufacturers.

Different perspective in Germany and France

The manufacturers hold back with an official comment. But it is obvious that French and German manufacturers have different interests. The German premium brands are still making high profits from sales of combustion engines in Asia. They fear that China would immediately take retaliatory measures in the event of EU punitive tariffs. On the other hand, they would hardly benefit from protective tariffs on the European market because e-cars from China do not represent any competition for them. At Renault or Stellantis, the situation is exactly the opposite.

According to the EU definition, there is a reason for a reaction to dumping if

• The products are offered at not a reasonable production price, which is derived from the production costs in comparable countries,

• damage to EU industry; and

• there is a connection between the low prices and the damage.

Whether it's dumping or simply cheap prices: the concern about a glut of attractive Chinese cars is justified. An electric car is as much an electronic product as it is a vehicle. Therefore, the rules of the game of the electronics industry apply to a large extent. And for the manufacture of electronics in large quantities it is generally cheaper to pay in China. This applies to mobile phones, screens, solar cells, batteries, PCs, game consoles, cameras - and in future also to cars.

Low costs not only because of subsidies

There are several reasons for the Chinese cost advantages:

• Lower labor costs: Although wages in China have risen, the average minimum wage in the technical regions is still low at just under 400 euros a month. And the workers are well trained.

• Low site costs: Manufacturers benefit from reduced electricity, land, water and waste water prices. Every province wants to get its auto champion.

• Stable supply chains: Those who produce in China need not fear any bottlenecks in the delivery of parts from China. There is also every imaginable component in China – mostly in the vicinity of the technology cluster.

• Good infrastructure: Railway lines and ports ensure seamless connections to the target markets.

• Production volume: Because China supplies the whole world from central factories, the mass production creates enormous economies of scale, so that the production costs per car are low.

• Subsidies: Key sectors receive direct and indirect subsidies. It can also look like the provincial government locating a technical college for photovoltaics next to the plant of a large solar manufacturer like Yingli.

• Industrial metals: Access to raw materials such as rare earths, cobalt or manganese is comparatively easy and cheap because these also come from China.

The biggest concern: Good products

In relation to the low price, very decent cars come from China. The providers there have recently not only caught up with the German car manufacturers technically, but also overtaken them in some cases. This applies above all to the digital technology of the vehicles: while Germany's engineers were still working on the connecting rods and pistons, the focus in China was already on the integration of apps into the smart car device.

As far as passenger safety and smooth running are concerned, China's manufacturers had several decades to learn all the tricks from models from Germany, Japan or the USA. After all, they had to produce in joint ventures with Chinese partners, which enabled a regulated transfer of technology.

Those are the attackers

The volume advantage of the Chinese market has long been reflected in the figures. The largest Chinese supplier BYD sold a good 900,000 pure electric cars last year. That is already a tenth of the total production (electric and combustion) of the world market leader Toyota. VW sold 570,000 purely battery-powered cars.

Other Chinese attackers are also interesting for their new concepts:

• Lynk & Co offers its cars on a subscription basis, appealing to a generation that tends to be strangers to car ownership.

• Nio relies on changing batteries as an alternative to tedious charging.

• Wuling specializes in super cheap mini cars.

• Geely already has a foot in the door in Europe with its subsidiary Volvo.

• SAIC, a state company, was able to land a small electric car sensation with the classy MG4.

A study by the Allianz insurance group sees the greatest threat to German industry in the Chinese attackers. 

However, even the tariffs will not change the basic problem that China can exploit price advantages on its own market and on the world market. Even if the USA were to go along with protective tariffs, German and European industry would have a price problem in large parts of the world.

This post was adapted from the China.Table Professional Briefing.”


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