The first episode of this programme that aims to decode the European Union (EU) legislative process explains why the European automotive industry is at a critical crossroads. Will tariffs on Chinese electric vehicles help competitiveness or trigger a trade war?
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00:00The European car industry is at a critical crossroads.
00:16The traditional combustion engine has been around for a century and a half, like we are
00:20seeing here in this Brussels museum.
00:25But electric batteries are increasingly replacing them, so that the vehicles do not emit polluting
00:31gases.
00:32But there is a catch.
00:35China is flooding the market with cheaper models and the European industry is selling
00:39fewer and fewer.
00:42So the European Commission wants to impose higher tariffs on them starting in November.
00:47Our program UDecode will decipher this measure for you.
00:52Chinese electric cars sold in EU have quadrupled between 2020 and 2023 from 1.9% to 8.8%.
01:01And share of the market could reach 17% next year, says the European Commission.
01:08These cars currently pay a 10% tariff.
01:11The tariffs ranging from 7.8% to 35.3% will be added depending on the brand.
01:19So why are the Chinese cars cheaper?
01:21Because the Beijing government provides large subsidies to the production.
01:25The European tariffs are meant to bring the prices closer to those of the European brands.
01:31But will the consumers agree with this strategy?
01:51I
02:14think Europeans are able to produce electrical cars as good as the Chinese do.
02:20So if the laws are in favor, like in Norway, for example, there are a lot of helps of the
02:28government to help Norwegian people to buy electrical cars.
02:31So if we do the same in the European Union, of course, I will try to buy an European one.
02:51To further decode this topic, we will now talk with a colleague from Euronews who focuses on this issue.
02:58Hello, Jorge.
02:59So before deciding on the tariffs, the European Commission conducted an investigation into the Chinese electric car industry.
03:08What was the scope and the findings?
03:10The Commission found an ecosystem of subsidies.
03:14We're talking about cheap loans.
03:16We're talking about grants, tax reductions, even green bonds.
03:20All of these together help Chinese companies lower the prices of their electric vehicles and sell them abroad with a clear advantage.
03:29So the 27 EU member states had to vote on this measure and five of them were against it.
03:36Notably, Germany, which is an important powerhouse in the automotive industry.
03:42But Italy and France, for example, are in favor.
03:46So what divides them?
03:48On the one hand, we have France, the Netherlands, Poland, Italy as well, supporting the tariffs,
03:54because they believe that if these tariffs are not applied, European carmakers are going to be pushed out of this very lucrative sector
04:02that is going to become more and more important as countries transition towards climate neutrality.
04:08We have to say that Germany recognizes the existence of unfair competition,
04:12but believes tariffs are not the correct solution because Germany fears the tariffs could trigger a trade war with China.
04:22And on the other side is the Chinese government that has reacted quite angrily to this from the outset.
04:28So what is their position and can they still stop the tariffs with a political solution?
04:35So China has had a very antagonistic position and in fact has threatened retaliation against key European products,
04:43such as dairy, brandy and also pork. So the tensions are really high.
04:48Thank you, Jorge, for these explanations. We hope to have you soon in EU Decoded.
04:53And let's now show some important facts and figures.
04:57Around 13.8 million people work in the European Union's automotive industry,
05:03which represents more than 7% of the EU's wealth produced in one year.
05:07However, the market share of battery electric cars was only 21% in 2023 and even fell to 14.4% this year.
05:19By the way, do you know that by 2035 the EU has to stop selling new combustion engine cars?
05:26The goal is to help reduce the consumption of polluting fossil fuels.
05:30So a lot more electric cars need to be on the roads.
05:36On our decoding journey, we will now talk to the chair of the International Trade Committee in the European Parliament.
05:43Hello, Mr. Bernard Lange.
05:45Hello.
05:46So the tariffs are expected to come into force in November and stay for five years.
05:53Many people say it's the beginning of a trade war.
05:56Can a political solution still be found with China to stop this process?
06:01Let's see how the negotiation will go on.
06:04And perhaps it will take even longer than the 30th of October.
06:09But the purpose of the whole exercise is to find a solution to avoid illegal subsidies so that we have really a level playing field.
06:20So China is already targeting in the same way with higher tariffs on European Union agricultural goods.
06:28Could we expect these measures and this process to have also a cost to the European market in the future?
06:36Have also a cost to the European market in terms of money, but in image in the global markets?
06:41Of course.
06:42Now the Chinese side is gambling and playing a little bit with so-called counter measures.
06:50And if there is something going on, then we, of course, are able to go to the WTO and make a case on that.
06:56To keep the European electric cars industry competitive, manufacturers are asking for other measures like easy access to minerals for the batteries,
07:07an expansion of the charging points for the owners of these cars and others.
07:11Are European executives doing enough on this?
07:15We have to support the development of batteries.
07:19As you know, batteries are making round about 30 up to 40 percent of the added value in electric cars.
07:26So we need the production in Europe, high technology, long range batteries.
07:33So there we have to invest.
07:37One red flag showing that European car industry is at risk was the decision to close some factories of electric models in Germany and Belgium.
07:47Thank you for watching and don't miss next week's program for more decoding on European policies.