The EU has slightly eased its stance on "imposing tariffs", but the pressure on Chinese automakers remains unabated.

In the first three quarters of this year, the registration volume of new pure electric vehicles in the European Union (EU) decreased by 5.8% simultaneously, and the market share dropped from 14% to 13.1%. The EU seems to attribute such a result to the invasion of Chinese pure electric vehicles.

On October 29, the regulation of the EU to impose anti-subsidy duties on Chinese pure electric vehicles officially came into effect for a period of five years.

Among them, Tesla, the brand with the highest sales of electric vehicles in Europe, has an additional 7.8% tariff on new vehicles produced in its factory in Shanghai, China and exported to Europe.

The tariffs faced by Chinese local enterprises are even heavier: BYD has an additional tax rate of 17%, Geely 18.8%, and SAIC Group 35.3%. For the other four companies, the additional tax rate is 20.7%, and for uncooperative enterprises, it is uniformly 35.3%.

That is to say, if an electric vehicle produced by a Chinese independent brand wants to enter the European market for sale, it will be subject to a tariff of up to 45.3%, which is undoubtedly a devastating amount.

This regulation has been opposed to varying degrees in both China and the EU. In the vote of the 27 EU member states, five countries clearly voted against it, including Germany, a major automotive industry country, and Hungary, a window country where Chinese auto companies have built factories in Europe.

The chairman of the Mercedes-Benz board of directors stated publicly that the anti-subsidy duties will harm the development environment of the entire European pure electric vehicle industry.

Sure enough, less than a month after the regulation came into effect, the punitive tariff plan has changed. On November 23, Bernd Lange, the chairman of the European Parliament's International Trade Committee, revealed in an interview with German news television:

"We are continuing to negotiate with China on electric vehicles and are close to reaching a decision to cancel tariffs with China. We are about to reach an agreement: China can promise to provide electric vehicles in the EU at least at the minimum price."

Both China and the EU are sending a positive signal - the EU seems to be easing up on Chinese electric vehicles.

Industry insiders told 36Kr, "In fact, there are still many uncertainties". Although European auto companies need Chinese pure electric vehicles to jointly drive the consumption enthusiasm of the European market, it is also the basic responsibility of the EU to control the speed of Chinese brands entering Europe and protect the interests of local enterprises.

Under the tariff turmoil, how will Chinese auto companies survive when going overseas to Europe?

Chinese Auto Companies: Expecting Tariff Reduction

According to data from the market research institution EU-EVS, in October this year, SAIC's MG4 EV sold 2,193 units in Europe, ranking 14th on the European pure electric sales list, making it the leader in European sales among Chinese local auto companies.

This model, which has a starting price of only 129,800 yuan in China, is priced at 31,990 euros in Europe, equivalent to nearly 250,000 yuan. Despite such a price difference, the MG4 EV still gains consumer favor in Europe.

The Volkswagen ID.3, which has a similar price and positioning, sold 3,455 units in the same month. For the MG brand, which already has a small reputation in Europe, if the tariff is further reduced on the original basis, the further growth of MG4 EV sales is not an illusion.

For Volkswagen, the tariff policy will affect the market competitiveness of its pure electric vehicles, but it is not without benefits.

Someone from Volkswagen told 36Kr that the new model Terramar of the Cupra, a high-performance sub-brand of the Volkswagen Group launched in Europe, is produced in the Volkswagen Anhui factory in Hefei, "This model is exported from China to the EU".

The tariff will directly affect the pricing of the Cupra brand and the profit level of Volkswagen. Terramar is the beginning of Volkswagen's production in China and export to the EU. Changes in the tariff policy also affect the global fate of this German auto company.

For new energy vehicle brands that have just entered the European market, since their sales business in Europe is in the early stage, the damage caused by the additional tariff is not yet significant.

The general manager of XPeng Motors in Western Europe once publicly stated that XPeng Motors' short-term goal is to gain a firm foothold in Europe, not to pursue sales volume, but to focus on establishing the brand image.

"But tariff reduction is definitely a good thing for us," another person responsible for the overseas business of a new energy vehicle company told 36Kr, "However, there are too many messages now, and in fact, there are still many uncertainties."

Before the results are announced, auto companies can only choose to "wait".

Where is the Way Out for Chinese Auto Companies under Tariff Barriers?

In the era of fuel vehicles, the competitiveness of Chinese auto companies in the global scope is indeed limited. However, with the continuous increase of the penetration rate of new energy vehicles in the Chinese market, the three-electric technology of independent brands has undergone repeated validations in the consumer market.

Among them, in terms of batteries, Chinese enterprises occupy a leading position globally.

On the one hand, the energy density of domestic batteries is continuously optimized, and the battery safety and vehicle thermal management are steadily improving. On the other hand, due to the fast growth and large total volume of Chinese electric vehicles, the scale effect of Chinese enterprises is more obvious.

This means that if European consumers need a car with a larger battery, then Chinese enterprises will have a new opportunity.

This is happening.

In the first three quarters of 2024, Toyota with its fifth-generation hybrid technology, has made great achievements in Europe, further consolidating its second position in sales after Volkswagen. From nickel-metal-hydride batteries with a very small capacity to lithium batteries with a capacity of 18.8 kWh, the large-battery hybrid technology is deeply favored by European consumers.

Among them, the new C-HR sold 97,000 units, becoming Toyota's fourth best-selling model in Europe. The PHEV version of the C-HR that was launched simultaneously has led to a 93% year-on-year increase in the sales of Toyota's plug-in hybrid models in Europe.

Under the same volume, a lithium battery with a larger capacity can reduce the carbon emissions of hybrid vehicles, create a longer pure electric cruising range, and provide power for more power-consuming entertainment facilities in the vehicle.

This large-battery hybrid technology is precisely the advantage of Chinese auto companies.

From January to August this year, the sales of plug-in hybrid vehicles in the Chinese market increased by 85.4% year-on-year, with a total of 2.786 million units. And this trend is continuing, and Chinese independent brands are continuing to increase the battery capacity of hybrid models.

The Han DM-p four-wheel drive flagship model launched by BYD this year has a pure electric cruising range of up to 202 km. CATL even released a Xiaoyao battery specifically developed for hybrid models in October, which is the world's first hybrid battery to achieve a pure electric cruising range of more than 400 km.

Volvo, Jaguar Land Rover, Toyota and other enterprises have stated that they will meet the market demand for large-battery hybrid models and invest in the development of a new generation of PHEV plug-in hybrid models.

Toyota President Koji Sato said that the pure electric cruising range of Toyota's new generation of PHEV models will be at least 200 kilometers.

In the technical and product development of large-battery hybrid models, Chinese enterprises are indeed ahead of other regions. Whether they can seize the developing consumer demand in the European market will become one of the keys for Chinese auto companies to go overseas to Europe.

Starting from countries with a large Chinese population is a good choice.

Industry insiders told 36Kr that the United Kingdom is one of the regions in Europe with the highest acceptance of Chinese vehicles. "The British understand cars and are not rigid in their thinking. Some Chinese brands have the best sales in the UK in Europe."

As it is not restricted by EU regulations, the UK is more likely to become the main position to support the sales of Chinese automobiles in Europe.

There is also Hungary, a country with the densest Chinese businesspeople in Europe. Currently, the total number of Chinese people has exceeded 60,000. Chinese enterprises such as Huawei, BYD, and CATL have all invested in Hungary. BYD even has a new energy bus factory in Hungary.

"For Chinese electric vehicles to enter Europe, the primary problem to be solved is still the construction of brand power," industry insiders told 36Kr. But compared to European consumers, Chinese people are obviously more likely to accept automobiles of Chinese independent brands.

With the help of the Chinese, quickly open the European market and increase the number of independent brand vehicles in Europe. Then, through users and word-of-mouth, first have brand influence in the areas where Chinese people gather, and then gradually expand to the region, the country, and even the entire EU and Europe. "This will be a more practical and feasible path".

In Europe, the birthplace of automotive culture, high tariffs will inevitably increase the difficulty for Chinese auto companies to enter. However, the downward adjustment of the tariff policy only lowers the threshold. The road for Chinese brands to go overseas to Europe is bound to be long and difficult.