The European Commission is set to impose countervailing duties (CVDs) of up to 35.3 percent on electric vehicles (EVs) from China, in addition to the European Union's 10 percent tariff on imported cars, after EU countries did not oppose the move in a October 4 qualified majority vote.
The duties are a mistake. They will harm EU citizens more than help them, and they will eventually backfire on the European automotive industry.
According to industry sources, Chinese-made EVs, many in joint ventures with EU and U.S. carmakers, now match world quality standards and are much lower priced. Indeed, this is the fear that triggered the policy debate on duties. Moreover, it is understood in the automotive industry that subsidies in China and elsewhere now play a minor role in market outcomes. The price or quality advantage of Chinese EVs appears to reflect China's vast economies of scale (it produces 60 percent of all EVs), low labor costs, a technology and materials edge in batteries, intense competition among over 100 China-based producers and their early-mover advantages.