Published in the Financial Times, the latest analysis from Transport & Environment (Belgium) predicts that 25% of electric vehicles sold in the European Union (EU) this year will be produced in China as competition in the global electric vehicle market is stronger than ever.

According to the research, about 19.5% of electric cars sold in the EU last year were made in China, including cars from Chinese brands, such as MG and BYD as well as Western car models but made in China, such as Tesla, BMW and Renault. In particular, Chinese-brand electric vehicles currently account for 11% of the EU market and are expected to reach 20% by 2027. BYD car company has also grown spectacularly, accounting for 0.4% of the market share in 2019, up to 8%.

This research takes place in the context of Brussels completing an anti-subsidy investigation into electric cars originating from China. The results from this investigation are expected to lead to increased tariffs on electric vehicles imported from this country.

The head of BYD's European branch, Michael Shu, spoke out against EU accusations of subsidies from China last month. Sharing with the Financial Times, he said that it was the earlier investment in technology and productivity, compared to competitors, that made the company's car prices cheaper, not from subsidies from the Chinese government. 

It is estimated that if the tariff rate on electric vehicles is increased to 25% (compared to 10% currently), the European Commission (EC) can collect 6 billion euros per year and will enhance the competitiveness of domestic car models. land. In particular, Chinese car models with large and high-profit segments, such as sedans and mid-sized SUVs, if the expected tariffs are applied, will become more expensive than equivalent car models in Europe. This is likely to push Chinese corporations to invest more in vehicle production within the EU.

“Tariffs will force automakers to localize electric vehicle production in Europe,” said Julia Poliscanova, policy director of Transport & Environment. "This is good news because we need more job opportunities and production skills.” However, she also warned that increasing tariffs is only a temporary solution, and advised manufacturers to prepare for the prospect of China placing many electric vehicle factories in Europe.

In fact, Chinese car company BYD is also building a factory in Hungary and is expected to start producing electric vehicles in this country by the end of next year. The company aims to capture 10% of the electric vehicle market share and become one of the largest car brands in Europe by 2030.

On the other hand, the application of new tariffs could negatively affect long-standing European car manufacturers such as BMW and Renault, which are locating electric vehicle factories in China. As for China, many analysts believe that car manufacturers can still make high profits, based on the fact that domestic selling prices are much cheaper than export prices. In China, an electric car is estimated to cost up to 28% less than the price in Europe.