BMW CEO says EU tariffs on Chinese electric vehicles could backfire

The European Commission, which oversees trade policy in the 27-nation European Union, launched an investigation in October into whether fully electric cars made in China receive distortive subsidies and require additional tariffs.

“You can very quickly shoot yourself in the foot,” CEO Oliver Zips told reporters after the German premium automaker reported quarterly results. BMW imports Chinese-made Mini EVs and the iX3 to Europe. Like its German rivals Volkswagen and Mercedes-Benz, BMW is heavily dependent on revenue from its Chinese business. China is BMW’s second largest market after Europe, accounting for around 32% of sales in the first quarter.

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“We don’t think our industry needs protection,” Zipps told analysts on Wednesday, adding that operating on a global scale gives big automakers an industrial advantage. “You could easily jeopardize that advantage by introducing import tariffs.”

In March, the commission began customs registration of Chinese EV imports, meaning they could be hit with tariffs if a trade investigation finds they are receiving unfair subsidies.

The investigation is due to be completed by November, but the EU could impose provisional duties in July. Brussels must publish a summary of the proposed provisional duties by June 5, and these duties will be imposed by July 4.

European Commission President Ursula von der Leyen said in Berlin on Wednesday that Europe needs to take action to prevent China from flooding the bloc’s market with subsidized electric vehicles.

French President Emmanuel Macron and von der Leyen on Monday urged Chinese President Xi Jinping to ensure more balanced trade with Europe.

Zipse told analysts that BMW and other automakers have “bilateral dependence not only on the end product but on the components side and the raw materials side.”

Imposing the duties could backfire as new EU CO2 emissions standards that will require more EVs – which rely on Chinese battery materials – kick in next year. “There won’t be a single car in the EU without components from China,” Zipse said.

He said imposing tariffs would undo the EU’s industrial plan to ensure the bloc is a leader in reducing carbon emissions and developing the technology needed to do so. “There is no green deal in Europe without resources from China,” Zipes said.

Date of first publication: 09 May 2024, 07:41 AM IST