In an exclusive report from Reuters, it has been revealed that the European Union has turned down China’s proposal to set a minimum import price of €30,000 (approximately $32,915) for electric vehicles manufactured in China. Sources, speaking anonymously, indicated that Brussels rejected the proposal in an effort to stave off potential tariffs that are set to be imposed next month.
The report details that the European Commission had previously dismissed the minimum price suggestion amid its anti-subsidy investigation into Chinese electric vehicle manufacturers. This developing situation has marked one of the most significant trade disputes between Beijing and the EU in a decade.
China’s government introduced this pricing commitment during negotiations, hoping to convince the EU to withdraw its plans for countervailing tariffs. However, specific numbers regarding this commitment did not emerge until Reuters’ report.
According to the report, the specifics of the discussions remain confidential, with both the Chinese Ministry of Commerce and the European Commission declining to comment promptly. Historically, the European Commission has refrained from discussing ongoing negotiations.
Data from JATO Dynamics for 2023 shows that the average price of Chinese electric vehicles is less than half that of their European and U.S. counterparts. Chinese manufacturers enjoy various cost advantages, including local sourcing of materials and batteries, as well as significant government subsidies from Beijing. In the first half of 2023, the average retail price for Chinese electric vehicles was approximately €32,000 ($35,126), featuring models like BYD’s Seagull, which is priced under €10,000.
In contrast, the average retail price of battery-electric vehicles in Europe sits at around €66,000. Although there are efforts to develop lower-priced models, expected to be around €20,000, they are not projected to hit the market until 2025, with Volkswagen planning to launch a €20,000 vehicle by 2027.
When rejecting China’s proposal, Brussels emphasized that the concerns extend beyond just the prices set by manufacturers for Chinese electric vehicles; it also includes the subsidies these manufacturers receive during production and the consequences of eliminating such support payments. The European Commission has withheld specific pricing details and highlighted that Chinese electric vehicle manufacturers had committed to maintaining certain pricing levels to prevent a flood of low-cost cars that could disrupt local competition.
Chinese automotive giants like SAIC Motor and BYD, while offering much lower prices in their home market, have positioned their electric vehicles slightly above €30,000 for the European market. This strategy showcases their adaptability in appealing to European consumers, particularly with BYD’s Seagull, a compact electric car anticipated to launch in Europe next year at around €20,000.
According to Reuters, the opportunity to reach an agreement and avoid tariffs is narrowing. The European Commission has recently stated that without an agreement on an alternative plan, tariffs of up to 45% on Chinese electric vehicles could start as early as October 31 and last for five years.
China’s Ministry of Commerce previously mentioned it is exploring alternative solutions to tariffs, including variations of “flexible pricing commitments,” although details remain scarce. The European Commission has expressed a willingness to reconsider other pricing commitments, such as minimum pricing and import quotas, as negotiations evolve. Sources indicate that a proposed minimum price range of €35,000 to €40,000 could potentially serve as a more effective benchmark for negotiations.
