Shares in BYD, the Hong Kong-listed automobile manufacturer, saw a surge of up to 9% on Thursday. This came as a result of tariffs on electric vehicle (EV) imports from China by Europe being less severe than predicted by market analysts. The European Commission disclosed added interim duties ranging from 17% to 38% on China’s EV imports, supplementing a pre-existing 10% tariff.
This announcement followed a lengthy investigation into alleged state subsidies China had been providing for the EV industry. It also comes a month after US President Joe Biden laid down a hefty 100% tariff on Chinese EVs entering the US market.
Among the companies named by the Commission, Shenzhen-based BYD, supported by Warren Buffett’s Berkshire Hathaway, was given the lowest added tariff of 17.4%. In the face of these new tariffs, BYD is particularly well-positioned due to its previous investment in an EV production facility in Hungary, enabling local manufacturing, along with high profit margins.
AutoXing, a Chinese auto industry consultancy’s founder, Lei Xing, remarked on BYD’s luck at receiving a tariff rate below projections, with potential expectations reaching as high as 40%. The automaker’s shares adjusted their gains, seeing a 6% rise and trading at HK$233 (€27.6) by Thursday afternoon in Hong Kong.
Critics in Beijing and state news outlets criticised the new tariffs as the most recent representation of Western protectionism against China. They also indicated internal bloc and European automotive industry resistance to these tariffs. Cui Dongshu, the secretary general of the China Passenger Car Association, suggested that the increased tariff could prompt Chinese automakers to move their production base to Europe.
The EU warned companies not abiding by its anti-subsidy investigation, announced in September, they would face the highest 38% rate. This impacted SAIC, a state-owned producer controlling a considerable portion of the lower end of Europe’s EV market via its MG brand. The Shanghai-based group retaliated against the commission’s decision on Thursday, stating the decision contradicts market economy and international trade principles, posing potential threats to the global auto supply chain’s stability and economic and trade cooperation between the EU and China.
In May, SAIC, China’s runner-up automobile exporter, stated that investigators from Europe have attempted to obtain details of a “business-sensitive” nature, such as its battery chemistry. SAIC, however, declined to disclose the sought-after information.
On Thursday, SAIC’s share value in Shanghai experienced a minor drop while shares of private sector firms Geely, Nio, and Xpeng slightly rose.
Citi analysts have noted that the increased tariffs may potentially lead to further amalgamation within China’s automobile industry. This would likely put leading companies such as BYD and Geely at an advantage over smaller local brands. – All rights reserved The Financial Times.