Chinese car makers can undercut rivals in Europe because their production costs are heavily subsidised
Secretary of state for transport Mark Harper said plans revolve around creating a level playing field
The UK will apply “robust measures” to ensure a level playing field for local car makers in the face of increased competition from Chinese EV manufacturers, Mark Harper, secretary of state for transport, told the audience of the SMMT Connected event today.
The pressure has increased on the UK to respond to the EU’s toughened stance on subsidy-backed Chinese car makers. In March, the European Commission said it had evidence to show Chinese EVs were being supported directly by state subsidies following an investigation begun in October into Chinese car prices.
The EU is widely expected to increase tariffs on Chinese EVs later this year from the current 10%, charged by both the EU and the UK. Industry watchers in Brussels expect tariffs to rise to 25%, substantially increasing export costs for Chinese EV firms.
The UK’s trade remedies regime will “make sure that that competition is fair and that there’s a level playing field”, Harper told the SMMT event in response to a question about the rise of Chinese car makers such as BYD and MG parent SAIC.
“Not just in the car industry but in all markets, it’s about making sure we have fair international trade and that we don’t have dumping or unfair subsidies,” Harper said.
German car makers in particular have recently pushed back against the potential increase in tariffs on Chinese EVs. Mercedes-Benz CEO Ola Källenius said this week he’d rather see tariffs lowered than increased.
“We didn’t ask for this. We as companies aren’t asking for protection, and I believe the best Chinese companies aren’t asking for protection,” he said. “They want to compete in the world like everybody else.”
Volkswagen Group CEO Oliver Blume yesterday echoed the words of his counterpart at Mercedes, saying that making it more difficult for Chinese firms to sell cars in Europe would ultimately threaten the ability of European firms to compete at a global level.
European car makers with significant market share in the country, such as VW, Mercedes and BMW, are worried that raising EU tariffs will prompt China to retaliate on import duties, as well as souring Chinese consumers on their locally built cars.
The EU investigation followed comments from Stellantis CEO Carlos Tavares made in 2022 arguing that Europe was failing to protect local car makers in the switch to electrification. “Conditions here are easier for Chinese car makers to compete than for Western car makers in China,” said Tavares. “The EU is wide open and it is not acceptable. Don’t support Chinese companies in Europe with easier rules than we’re getting there.”
However, Stellantis has since switched tactics by investing in Chinese EV brand Leapmotor in a deal that enables the global giant to book profits from Leapmotor exports outside China.
MG in particular has significantly grown its market share in the UK with cheap electric and combustion-engine cars. MG was the UK’s third best-selling EV maker behind Tesla and BMW after the first two months of 2024. The MG 4 EV, the UK’s second-cheapest electric car, starting from £26,000, was the third best-selling EV.
MG was the UK’s eighth largest brand overall in the same time period, ahead of Hyundai and Peugeot.
UK automotive trade body the SMMT has previously said it was not pushing for increased tariffs on behalf of its members, which include some of the Chinese auto makers themselves.
