The European Commission and China have agreed to replace anti-subsidy tariffs on Chinese electric vehicles with minimum price undertakings. This deal aims to prevent price wars and enhance profitability for mainland carmakers like BYD. Analysts expect it to curb sales volumes while fostering brand reputation in Europe.
Assemblers of Chinese pure-electric cars from BYD to Leapmotor will avoid a brutal discount war after European authorities accepted price undertakings to replace punitive anti-subsidy tariffs of up to 35.3 per cent.
The EU levied tariffs of 7.8 per cent to 35.3 per cent on Chinese-made pure electric cars in late 2024 following more than a year of anti-subsidy investigations. According to their announcement on Monday, the European Commission, the executive body of the EU, and Beijing reached an agreement to remove the tariffs. Instead, Chinese EV builders agreed to sell their cars at minimum prices on the continent.
Minimum prices would technically temper sales volume, particularly for low-priced small electric cars, Deutsche Bank analyst Wang Bin said in a research note. But he added that the policy shift would have a positive impact on China’s EV king BYD, which posted a nearly fourfold delivery jump in Europe last year.
The commission outlined how Chinese exporters could submit price undertaking offers, which it said must be “adequate to eliminate the injurious effects of the subsidies and provide equivalent effect to duties”. It encouraged exporters to include commitments such as annual shipment volumes and planned future investments in the EU.
The agreement on price floors will allow mainland carmakers to avoid price wars and nurture brand reputation, analysts say. While shipments may decrease, profitability is expected to improve.
