MNI: EU Cautious As China Offers EV Quota - Officials
MNI (BRUSSELS) - China has offered to voluntarily limit the number of electric vehicles it exports to the European Union and to exercise restraint in their pricing, in a last-ditch bid to head off planned tariffs, but the European Commission has responded cautiously, EU officials told MNI.
With member states due to vote soon on whether to make provisional countervailing tariffs averaging 20.8% on Chinese electric vehicles permanent, China has yet to put a number on the size of its voluntary quota, with discussions so far limited to the principles of any such scheme, sources said. They added that it would be difficult for the Commission itself to suggest a quota size, since this could undermine the conclusions of its investigation into China’s subsidies of its EV sector. (See MNI: EU-China Near EV Deal Amid Fears Over Trump, Growth)
“China would need to offer a price very close to the post-tariff level to keep the Commission happy and so then it would just be a face-saving exercise for them,” one source said. “The Commission is not closing the door to talks, but it has delayed the vote among states which was due to take place Wednesday [Sept 25] for at least one week and it has until the end of October if it wishes to continue talking.”
The Chinese solution would have several attractions for member states. Whereas tariff revenue normally goes into the EU budget, such a voluntary quota scheme would see revenues staying with car dealerships and increase tax revenue for national treasuries. The Commission also wants to keep talks with China going in order to gauge the seriousness of proposed counter measures on EU dairy imports, pork and cognac.
MACRON ADAMANT
But officials noted that the Commission will be conscious of the need to be supportive of the more assertive U.S. position adopted towards Chinese EVs. And French President Emmanuel Macron remains adamant that measures to protect against Chinese electric vehicles must be taken, with one source adding that he had only supported a second term for Commission President Ursula von der Leyen on condition that she do so.
In addition, the Commission has always had concerns around the monitoring and policing aspects of voluntary quota schemes as against the simplicity and automaticity of imposing tariffs. Brussels says that its proposed tariffs are totally WTO compliant.
Audi’s signalled closure of its EV plant in Belgium has underscored the challenges faced by European EV makers because of falling demand and high costs, with recent data from the Association of European Car Makers showing dramatic falls in year-on-year registrations of battery electric vehicles and hybrid cars. German and French car markets were particularly hard hit.