The European Union will limit imports of hybrid electric vehicles from China to 350,000 cars per year, starting in December. This decision aims to reduce China's market share in the EU, which is currently 6%. The European Commission confirmed the quota as part of a four-year agreement made in Beijing last week. In 2023, about 800,000 battery and plug-in hybrids are expected to be sold in the EU, showing a big rise in imports.
Key Details
The quota will be enforced under World Trade Organization safeguard measures. This allows for quick implementation without the long investigations typical of anti-dumping measures. Vehicles imported above the quota will not incur tariffs but will be held at customs in Europe. Notably, Chinese vehicles assembled within the EU will be exempt from the quota. This includes cars produced in Hungary and future facilities in Spain. However, EU companies making vehicles in China will still face the new restrictions.
Background
Chinese exports of hybrids to the EU surged to €6.7 billion in the first half of 2023. This is up from €2.2 billion during the same period last year, according to Chinese customs data. Analysts suggest that the quota may slow but not stop the growth of Chinese automakers in Europe. Companies like BYD and Chery are expected to speed up plans for local production in the EU to adjust to the new rules. Li Yanwei, an advisor to the China Automobile Dealers Association, stated that the cap will likely speed up the localization of manufacturing in Europe.
The new quota could affect the pricing and availability of hybrid vehicles in the EU market. This may impact sectors related to automotive manufacturing and sales. Investors will watch for further developments in EU-China trade relations, especially regarding the implementation of the hybrid vehicle cap and its effects on local production strategies.
Based on reporting by: theguardian.com, businesstimes.com.sg