After the US announced quadrupling tariffs on the Chinese EVs, EU leaders are expressing reservations about possible European duties on EVs from China, urging the bloc not to undermine these “entanglements” and “exchanges”.
German Chancellor Olaf Scholz says “At present anyway, 50% of imports of electric vehicles (EVs) from China come from Western brands that produce there themselves and import them to Europe.” Sweden’s Prime Minister Ulf Kristersson insists, “As far as tariffs are concerned, we are in agreement that it is a bad idea to dismantle global trade.”
Brussels’ anti-subsidy investigation into EV imports from China earlier faced pushback from leading European carmakers who warned that such restrictions could upend the bloc’s Green Deal plan and adding Brussels could “very quickly shoot” itself in the foot for these measures would put a drag on bloc’s ambition of developing a technology to cut CO2 emissions.
China leads the industry, as it actively promoted the adoption of EVs nationwide, created a favourable environment, courted large companies to build production facilities in China and handed out similar subsidies to foreign companies, it gave to domestic firms. This drove Chinese companies into more quality and technology competition and boosted China as one of the world leaders in climate policy.
With tariffs on Chinese EVs, the EU climate neutrality target, centering on cutting road transport emissions by 2035, will be at risk. A decline of 11.3% in battery-EV registrations in March and further contraction of their share from 13.9% to 13% evokes skepticism about the largest European carmakers’ ability to advance the bloc’s climate agenda by boosting sales of battery rides without China.
According to the International Energy Agency (IEA), China in 2022 was by far the leader in global EV sales, accounting for 60% of the total volume. Tariffs will break the momentum of fast-growing EV demand, which could help cut emissions of about 700Mt CO2-equivalents.
Average EV price in Europe (and the US) is very high, roughly double the cost in China. With many European consumers not ready to shift away from the combustion engines, duties won’t make the domestic manufacturers competitive but will certainly slow the embrace of the EVs, thwarting the EU climate goals. Analysts too doubt whether Europe could ditch combustion engines without China whose technology is a notch above Europe.
These intrinsic challenges are driving the European automakers to reconsider their approach and benefit from China’s expertise in producing cheaper batteries and affordable EVs.
EVs are a godsend to the world for its huge potential to reduce transport emissions which, the UN says, accounts for a quarter of total GHG emissions. If countries carry through their stated energy and climate policies, the rapid uptake of all types of EVs, per IEA, could avoid six million barrels per day (mb/d) of oil demand in 2030 and 10mb/d in 2035, equivalent to the amount of oil used for road transport in the US.
American Lung Association says that zero-emission EVs by 2050 could protect millions of pediatric respiratory attacks and generate $1.2 trillion in health benefits in the US alone, besides reducing 8.8 million deaths due to air pollution globally. Since transport in Europe and America represents almost 25% and 28% emissions respectively, it calls for making this sector an avenue of global cooperation rather than an apple of discord.
Observers, accusing China of taking over the EV industry, too acknowledge that Chinese EVs are “full of high-tech” and “innovative new features” as well as dirt cheap, prodding their manufacturers to learn from China. But the fear of another “China shock” is holding them back from supporting cooperation to slash transport emissions.
For decades, Europe’s combustion cars controlled the Chinese auto market; as sides began to transpose, the EU is suddenly resorting to tariffs. As Brussels has made progress in cutting emissions in all but the transport sector with most conventional cars still emitting as much CO2 as 12 years ago, it should avoid following Washington’s protectionist and shortsighted approach and support EV cooperation to cut its own and global transport emissions.
Published in The Express Tribune, May 25th, 2024.
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