Rising Influence of Chinese Electric Cars: Market Disruption and Trade Tensions

A report by Lea Fayad, English adaptation by Nadine Sassine

 

How do you feel about a car that displays emojis and plays music to engage pedestrians on the road?

And what are your thoughts on this new vehicle, hailed by a Chinese company as one of the most luxurious models, boasting cutting-edge technology and features at a price of just $20,000—less than half the cost of an average electric car in America?

China is aiming to disrupt the dominance of US and European luxury brands, known for their higher quality, by rapidly expanding its share of the global electric vehicle market with competitively priced offerings. Chinese electric cars now account for about 60% of new electric vehicle sales, largely due to strong government support for the sector.

This surge in Chinese electric car imports has raised concerns in Western countries like the United States and the European Union, which have experienced a sevenfold increase in these imports over the past three years.

 

Therefore, the European Commission is investigating the legality of Chinese government support and market flooding, and is considering imposing additional tariffs on Chinese imports of electric cars to protect its industry.

 

This issue is one of the main goals of the meeting between Chinese President Xi Jinping and his French counterpart Emmanuel Macron, who emphasized the importance of having fair trade rules.

Currently, Chinese electric cars are subject to a 10% tax in the European market, while European cars face a 15% tax in the Chinese market. For comparison, the tariff imposed by the United States on these Chinese cars is 27.5%.

 

There remains a fundamental issue facing the European investigation into imposing additional tariffs, and that is the divisions within the European Union, particularly between France and Germany.

While France supports the investigations, German car manufacturing companies, which heavily rely on the Chinese market for sales, oppose them, fearing any retaliatory Chinese action that could impact their sales.