Shares of Chinese electric vehicle manufacturers saw a surge on Thursday morning following the European Union’s announcement of higher tariffs on Chinese EVs. Hong Kong’s Hang Seng index experienced a rise of 1.23%, largely driven by gains in EV stocks. Companies such as BYD, Geely, Nio, and Li Auto all saw increases in their stock prices, with BYD being the top gainer on the Hang Seng index, jumping 8% during morning trading. On the other hand, state-backed SAIC saw a decrease of more than 2%.
The EU’s decision to impose additional tariffs on Chinese EV players with a significant presence in Europe was announced on Wednesday. BYD will face an extra tariff of 17.4%, while Geely will have an additional 20% duty. SAIC will be subject to the highest duties at 38.1%, on top of the standard 10% duty already in place on imported EVs. The EU’s probe also included other Chinese EV manufacturers, with those who cooperated in the investigation facing 21% in extra tariffs, and those who did not cooperate experiencing 38.1% in additional duties.
Analysts have compared the EU tariffs to the higher duties imposed by the United States on Chinese EV imports, noting that the EU’s move is considered to be modest in comparison. The additional duties come after the EU initiated a probe in October and are currently provisional, with a planned implementation date of July 4 if discussions with Chinese authorities do not result in a resolution. The EU has stated that definitive measures will be put in place within four months of the imposition of provisional duties.
One expert, Joseph Webster, highlighted that the EU seems to be sending a message to Chinese state-backed SAIC to establish a production facility within Europe, or else face tariffs. SAIC, which received the maximum tariff rate of 38.1%, is encouraged to build a presence in Europe, unlike BYD and Geely, both of which have significant investments in the continent. BYD has committed to building a new EV plant in Hungary, while Geely, which owns Volvo, has already started moving production of some vehicles from China to Belgium.
Overall, the EU’s decision to impose higher tariffs on Chinese EV makers with a large presence in Europe has led to a positive market response, with shares of Chinese EV firms on the rise. The move is seen as a moderate response compared to the higher tariffs imposed by the U.S. on Chinese EV imports. Analysts are closely monitoring the situation, with definitive measures expected to be put in place within the next few months if discussions with Chinese authorities do not lead to a resolution. Chinese companies with significant investments in Europe, such as BYD and Geely, are likely to benefit from the EU’s decision, while SAIC may face challenges in avoiding the additional duties.
