China’s competitive flexibility in shaping the future car parc was again on display, as it reacts to EU tariffs by upping its hybrid output.
Tariffs as high as 45 per cent were imposed on some Chinese EV makers by the EU in October but now those makers are looking to raise hybrid production, where tariffs do not apply or shift production to Europe, Reuters reports.
Automotive analysts predict expects China’s hybrid exports to Europe to grow 20 per cent in 2024 and even faster in 2025.
“The increase is driven by Chinese OEMs shifting toward PHEVs (plug-in hybrids) as a way to sidestep the new EU tariffs on BEV (battery-powered EVs) imports from China,” Murtuza Ali, an analyst at Counterpoint Research, told Reuters.
European Commission introduced the tariffs on the grounds government subsidies in China had created spare production capacity of 3 million EVs per year, twice the size of the EU market and threatened to flood the market with cheaper models.
No barriers
Australia has no tariffs on imported EVs from China if they fall under the Luxury Car Tax threshold of between $80,000 and $92,000 depending on fuel type, and these imports are expected to rise as more models come online as the NVES is introduced in 2025.
The vast majority of Australia’s imported EVs are made in China, including Tesla and newcomer brands like BYD and GWM.
In the US and Canada, the Biden administration has imposed 100 per cent tariffs on Chinese EVs. The incoming Trump administration shows no sign of changing this despite Tesla being owned by Elon Musk, a Trump ally. The bulk of US Teslas are made in the US at its large plants in California, Michigan and New York, among other locations, however some key minerals, materials and elements are imported.
Hybrid rise
The popularity of hybrid cars, including traditional petrol electric hybrids and newer plug-in hybrids have surged in Australia as they overcome range and some cost issues.
From July to October, hybrid exports to Europe more than tripled to 65,800 units from the same period a year earlier, Reuters reports.
Plug-in hybrids and conventional hybrids account for 18 per cent of China’s total vehicle sales to Europe in the third quarter, doubling from 9 per cent in the first quarter. The proportion of EV shipments, however, fell to 58 per cent from 62 per cent during the same period the data shows.