The European Union is ramping up its defensive stance against Chinese electric vehicle imports through a combination of increased tariffs and new intellectual property sharing requirements, according to reporting from the Financial Times.

New Rules for Chinese EV Companies

Brussels is introducing tough new criteria that will require Chinese companies to establish factories in Europe and share their technological know-how in exchange for EU subsidies. The first test of this policy will come through a $1.1 billion (€1 billion) battery development grant program launching this December.

Tariffs Stack Up

The European Commission recently confirmed a significant tariff increase on Chinese EVs – up to 35% on top of an existing 10% levy. This move is designed to protect European manufacturers from what they view as unfairly priced imports. The EU has also set strict limits on Chinese components in hydrogen production, capping them at 25% for subsidized projects.

Battery Industry Impact

The policy shift has already influenced major players in the EV battery sector. CATL, the world’s largest battery manufacturer, has invested billions in new facilities in Hungary and Germany. Similarly, Envision Energy is expanding with new facilities in Spain and France. Meanwhile, Sweden‘s Northvolt faces financial challenges despite being Europe’s leading battery manufacturer.

Market Concerns

Industry experts worry about potential negative consequences. As Elisabetta Cornago from the Centre for European Reform points out, “You are temporarily putting a trade protection shaped like innovation support… to support your industry but that isn’t bringing down prices for consumers.” With batteries representing over a third of EV costs, these policies could significantly impact vehicle affordability.

EVXL’s Take

The EU’s protectionist measures present a complex challenge for the global EV market. While protecting domestic manufacturers is important, we need to balance this against the goal of making electric vehicles more accessible to consumers. This situation particularly impacts BYD and other Chinese manufacturers who have been leading the charge in affordable EVs. The success of Europe’s EV transition may depend on finding the right balance between protection and innovation.

What do you think about these new EU regulations? Share your thoughts in the comments below.