The results of the disclosure only slightly adjusted tariffs on imported cars by less than 1%. The tariff rate for SAIC Motor was reduced from 37.6% to 36.3%; Geely's tariff rate was reduced from 19.9% to 19.3%; and BYD's tariff rate was reduced from 17.4% to 17%.

Other car manufacturers that cooperate with the investigation but are not sampled will be subject to a 20.8% tariff, while those that do not cooperate with the investigation will be subject to a 37.6% tariff.

While the same Tesla produced in China applied for separate review by the EU Commission, it was finally ruled to be taxed at a rate of only 9%. Some European car companies' joint ventures in China will also have to pay tariffs, but they may be taxed at rates similar to those of Tesla, which are much lower than those of Chinese car companies.

hinese carmakers can raise objections within 10 days and request the European Commission to hold a hearing. By the end of October, EU member states will vote on the measure, once it is approved, the period for the additional tariffs will be officially set at five years. After the deadline expires, the European Commission will conduct a second review and has the authority to extend the period further.

Tariffs are not retroactive, theoretically there is still room for negotiation on exemptions

The EU announced in March 2024 that the European Commission would require the EU Customs to register Chinese imports of electric vehicles from March 7, with registration lasting for nine months. The purpose of the registration is to provide a basis for the European Commission to impose tariffs on Chinese-made electric vehicles retrospectively. This has caused great concern among China's automotive industry, as the tariffs will be calculated starting from March. However, the European Commission's decision this time means that the tariffs will not be retrospective.

There is theoretically still room for China to negotiate a reduction in tariffs before they are finalized.

Method One: China can try to get more EU member states to oppose the tax increase, provided it gets a qualified majority of support. A qualified majority is defined as at least 15 out of the 27 EU member states voting against, and these countries must have a combined population of over 65% of the total EU population. Some market research institutions believe that achieving this would be difficult.

Method Two: Chinese automakers can also try to reach a price commitment with the European Commission, China voluntarily and spontaneously restricts the number and price of cars exported to the EU, in exchange for the EU not imposing tariffs. China has reached similar agreements with the EU on photovoltaic products exports.

Japan's automobile success is a typical example of voluntary export restrictions

Against the second way, economically this kind of arrangement is called voluntary export restraint (Voluntary Export Restraint, abbreviated VER), also known as voluntary restriction agreement or planned export arrangement. Under the pressure or request of the importing country, the exporting country voluntarily sets a certain period for the export quantity or export amount of some goods to avoid the importing country taking more severe import restrictions measures.

Among the most typical examples is Japan's voluntary import quota restriction on automobiles exported to the United States. Japanese cars began globalizing and entering the US market in the 1960s, causing a severe impact on the US automotive industry by the early 1980s. The decline in profit rates and rise in unemployment rates of the US auto industry from 1979 to 1980 led Ford Motor Company and the United Auto Workers union to apply for protection under Section 201 of the Trade Act before the US International Trade Commission.

Several senators from the Midwestern states of America proposed a bill to limit the total number of Japanese cars exported to the United States in 1981, 1982 and 1983 to 1.6 million vehicles.

The Japanese government, knowing this news, very actively announced on May 1 that it would "voluntarily" limit the sale of cars in the US market. From April 1981 to March 1982, a total of 1.83 million vehicles were restricted.

After 1987, Japanese automakers began to produce cars within the US borders, and as a result, the number of cars imported from Japan naturally decreased. The actual import gradually fell below the quota limit. By March 1994, the voluntary export restriction on Japanese cars had been abolished in the US. The arrangement for the voluntary export restriction allowed Japan to enter the US market, where it has held a share of 35.5% until 2023. Toyota's 2024 financial report showed that nearly 10% of its profits came from North America.

We learned from public information and professionals that the European Commission's decision to impose tariffs is very firm, in addition, China has too many pure electric car brands and price ranges are also large, there are great difficulties between China and the EU on export restrictions arrangements for prices and export quantities. However difficult it may be, at least it represents a glimmer of hope.

After the temporary tariffs were imposed, they had a short-term impact on China's electric car sales

In the first half of 2024, China's exports of electric vehicles to Europe fell by 14.6% year on year, with a drop of 30% in June. According to data from market research firm Dataforce, in July, after the European Union began imposing temporary countervailing duties, the number of new electric vehicle registrations by Chinese automakers in the EU was down 45% compared to June.

However, from the market share perspective, there has been an increase. Chinese-branded electric vehicles have seen their market share in the EU continue to rise from 8.6% in Q4 2023 to 10.4% and 14.1% in Q2 2024. The main reason for this increase is that Chinese automakers are worried about tariffs being imposed, so they started shipping ahead of time. Photos taken by the media also show a pileup of electric vehicles at EU ports.

Geely raises its overseas sales target to 380,000 vehicles

The EU had previously imposed a 10% tariff on imported electric cars. After the EU announced it would impose an additional tariff, Geely was hit with an extra 19.3%, bringing the total to nearly 30%. At its mid-August earnings call, Geely announced that it would increase its export target from 330,000 vehicles to 380,000.

The main target for exports is Southeast Asia, Mexico and other emerging markets. The expansion speed in Europe has slowed down temporarily. On the one hand, Geely's direct export of electric vehicles to the EU itself is not large, with its sub-brand Zeekr mainly targeting the European market with hybrid models only, without pure electric models. On the other hand, Zeekr operates mainly on a subscription model rather than outright sales in Europe.

Subscription models may be unfamiliar to Chinese users, but they are relatively mature in the European market, especially in Germany. Car subscription is a model between car rental and leasing. European users pay a subscription fee to Koenigsegg, gaining access to cars and related services. The subscription fee usually includes insurance and daily maintenance costs.

Although Geely has slowed down its expansion in the European market, it has been laying out long-term plans. From acquiring Volvo to purchasing Lotus and London taxis, because the EU only imposes an additional tax on pure electric vehicles, Geely will introduce other hybrid models and continue to cultivate the European market.