China-EU tariff consensus on EVs seen cutting shipments but boosting profitability
Agreement on price floors will allow mainland carmakers to avoid price wars and nurture brand reputation, analysts say
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 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.
The European Commission, the executive body of the EU, and Beijing reached a consensus to replace the tariffs with price undertaking agreements with individual Chinese carmakers through negotiations, according to their announcement on Monday.
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.