After months of “will they, won’t they,” the European Union (EU) has finally decided to impose hefty tariffs on electric vehicles made in China in a pivotal vote on Friday. This decision came even as Germany, the EU bloc’s leading economy, voted against the tariffs. The EU’s decision to impose tariffs on Chinese EVs could impact companies like NIO (NIO), Li (LI), and XPeng (XPEV).
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The EU’s Tariffs on Chinese EVs May Hit 45%
Looking ahead, the proposed duties on Chinese-built electric vehicles could reach as high as 45%, potentially raising costs for carmakers importing their vehicles into the EU. These tariffs are set to be implemented next month and are intended to remain in place for five years. Moreover, the proposed EU tariffs range from 7.8% for Tesla (TSLA) to 35.3% for other companies deemed non-compliant with the EU investigation.
The European Commission, which oversees trade policy for the bloc, has argued that these tariffs are necessary to counter unfair Chinese subsidies. The EU’s decision follows an anti-subsidy investigation that lasted for a year. Despite the decision, the Commission indicated on Friday that it would continue discussions with China to find an alternative resolution.
Tariffs Had a Split Vote from EU Members
Interestingly, in Friday’s pivotal vote on tariffs, 10 EU members backed the tariffs, five voted against them, and 12 abstained.
For the tariffs to be blocked, 15 EU members representing 65% of the population needed to oppose them. This vote has clearly highlighted Europe’s division when it comes to commercial relations with China.
In addition to this decision, the EU has launched investigations into two key areas concerning China. Specifically, the EU will investigate whether Chinese clean tech producers are pushing subsidized goods into EU markets, and whether Chinese-owned companies are benefiting from subsidies while operating within the European Union.
What Are the Best EV Stocks to Buy?
For investors looking to dive into the EV sector, the TipRanks Stock Comparison tool has rounded the top Chinese EV stocks that analysts view with cautious optimism.
