Fuel Type: batterieelektrisch-bev

EU Commission confirms provisional tariffs on BEVs made in China

With provisional tariffs now imposed on imports of battery-electric vehicles (BEVs) made in China, how will this affect the European market? In the latest Autovista24 podcast, editor Tom Geggus and special content editor Phil Curry discuss the news.

BEVs made in China and imported into the EU are now subject to provisional tariffs. The European Commission confirmed the move as governmental talks continue. But which carmakers are facing steeper levies, and what is the likely impact on Europe’s automotive market?

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Show notes

Commission imposes provisional countervailing duties on imports of battery electric vehicles from China while discussions with China continue

Commission implementing regulation

Key points paper: European Commission’s anti-subsidy investigation

EU governments hesitant on Chinese EV tariffs as trade spat escalates

BEVs made in China face new provisional EU tariffs on top of existing duties

China’s impact on the European Automotive Industry

How to recharge Europe’s battery-electric vehicle market

The background

Following a month of talks, the European Commission has confirmed the implementation of provisional tariffs on BEVs imported from China. It aims to level the competition with domestic carmakers when it comes to list prices.

On 4 October 2023, the Commission launched an investigation into the illegal subsidisation of BEV value chains in China. Then on 12 June 2024, the investigation’s provisional conclusion was given following talks with the Chinese government.

‘As part of its ongoing investigation, the Commission has provisionally concluded that the battery-electric vehicle value chain in China benefits from unfair subsidisation, which is causing a threat of economic injury to EU BEV producers. The investigation also examined the likely consequences and impact of measures on importers, users and consumers of BEVs in the EU,’ the Commission stated at the time.

As a result, the Commission outlined new duties it would apply to BEVs made in China and imported into the EU. These pre-disclosed rates were calculated based on the amount of subsidisation the investigation uncovered.

Tariffs in place

On 4 July 2024, the Commission confirmed the provisional tariffs it would place on each BEV imported into the EU from China. The tariff rate was lowered slightly for many companies since the June pre-disclosure. This was the result of comments from interest parties on how the pre-disclosed duties were calculated.

These confirmed provisional duties will be in addition to the current 10% levy applied to imports, and will come into effect as of 5 July 2024 for a maximum duration of four months. Within this time, the Commission has confirmed that a final decision on the definitive duties can be expected.

This will follow a vote by EU Member States. If a qualified majority of at least 15 member states, representing a minimum 65% of the EU population, vote against tariffs, they will be blocked. When adopted, this final decision would make the duties definitive for five years. 

Possible outcomes

Christof Ruhland, director of business development at Autovista Group (part of J.D. Power), suggested several possible outcomes of the tariff implementation. These include:

  1. Chinese OEMs may delay or limit their BEV market entry strategies in Europe. This is because the new tariffs change their calculations
  2. There could be an increase in plug-in and full hybrid models, as these are not affected by the new tariffs
  3. Consumer prices for BEVs will rise as tariffs are too high to be absorbed by the profit margin. This also affects BEV models from European manufacturers that are produced in China
  4. Some Chinese imports may be redirected to non-EU countries like Norway and the UK, or other regions such as the Middle East or Brazil
  5. There will be an increasing need for Chinese OEMs to establish production sites in the EU to avoid import tariffs
  6. The tariffs could hinder the EU's environmental objectives by making EVs less accessible to the public, thereby slowing the transition from ICE to BEVs
  7. If there is no agreement on the matter, China will most likely introduce retaliatory measures, risking a wider trade war that could damage the European economy (not just the automotive sector).

Model impact

There will be an impact on several models currently available in Europe. Some cars in the January to May EV best-seller table, compiled with data from EV Volumes, will likely see tariffs imposed upon them.

The Tesla Model 3, currently the second best-selling EV in Europe, will likely be affected. However, the US manufacturer, facing a 20.8% tariff, has requested a review for an individual levy, which will be implemented at the definitive stage.  

The MG4, built by SAIC, was the seventh best-selling EV across the first five months of this year and is facing the highest tariff level. Geely’s Volvo EX30 is also likely to be affected. However, production of this model starts in Europe next year, meaning it will no longer face charges when it shifts manufacturing out of China. The world’s most popular carmaker, BYD, does not feature in Europe’s EV top 20 at present.

The overall EU BEV market will surely be affected by the tariffs. The region is looking to continue its transition to zero-emission mobility, making affordability a central tenant for mass marketability. But these duties mean carmakers are faced with a decision. Either absorb the tariff costs meaning smaller margins, or pass costs on to the consumer. Should this happen the region’s transition could struggle with fewer affordable models available.

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How popular are electric buses in Europe?

EV Volumes

Europe’s electric-bus market ended 2023 on a high, but has this growth continued into the first quarter of 2024? Przemek Kolasa, data manager for commercial vehicles at EV Volumes, examines the trends with Autovista24 special content editor Phil Curry.

Made up of full-electric and plug-in hybrid vehicles, Europe’s electric-bus market is growing steadily. Between 2021 and 2023, these models increased their hold on the new-bus market by seven percentage points, capturing 18% at the end of last year.

Full hybrid, alternative fuels (including liquid-petroleum gas, compressed-natural gas and ethanol) and hydrogen fuel-cell (FCEV), held respective shares of 11%, 10% and 0.5%. Between 2021 and 2023, they increased their hold by 2pp, 1pp and 0.07pp respectively.

Diesel buses still dominated the market, holding a 60% share at the end of 2023. However, this share has dropped 11pp from 2021.

Domestic buses first

In the fourth quarter of last year, Volkswagen (VW) Group topped the list of electric-bus manufacturers, with a 15% share of all registrations over the three months. The German brand was followed by Volvo, which took 11% of the market, and Daimler held 9%.

This performance helped VW Group end the year as the market leader, with a rapid increase in market share since 2021. The manufacturer took 11.3% of the electric-bus market, increasing its hold by 8pp over the two years.

CAF finished the year in second, thanks to a 10.1% market share. However, this was down by 2pp compared to 2022. Chinese manufacturer BYD also struggled, finishing in third with a market share of 9.6%, down 5pp year on year.

VW Group’s position was helped by a 260% increase in registrations during 2023, while CAF also increased its deliveries, albeit by 10%. Highlighting its struggle in the year, BYD saw 12% fewer registrations when compared to 2022.

Overall, the electric-bus market finished 2023 with a 47% registration increase, totalling more than 7,000 units.

Lion's leads the way

The leading model in the 2023 electric bus market was the Lion’s City, manufactured by MAN. It comes in three lengths and is equipped with a lithium nickel manganese cobalt oxide (NMC) battery. It has an average capacity of 506kWh and an estimated range is 350km.

Next on the list of leading models was the Urbino, from Solaris. It comes in four lengths and was equipped with NMC batteries until 2022. Since then, Solaris has equipped the Urbino with lithium-iron-phosphate (LFP) batteries, providing an average capacity of 546kWh and an estimated range of 450km.

The BYD K-Series was the next most popular model in 2023. It is 12-metres long and features LFP batteries with a maximum capacity of 422kWh. This means an estimated range of 450km.

Chinese struggles

Last year, the influence of Chinese manufacturers in the market started to wane. BYD and Yutong, the biggest companies from China in Europe at present, saw their shares decrease in 2023. BYD lost more than 5pp year-on-year, while Yutong lost 3pp compared to 2022.

This indicates that local manufacturers have taken note of the Chinese incursion into the electric-bus market, and have been developing their products to compete. This is likely the reason VW Group led the market at the end of 2023, with domestic manufacturers growing their shares.

Boost for hydrogen buses

In the medium and heavy bus segment, FCEVs are becoming a serious alternative to battery-electric and plug-in hybrid powertrains. In 2023, sales of fuel-cell models increased by 65%. This result is even more impressive as it came after a two-year slump for the technology.

In 2024 and beyond, more positive numbers are expected. There are new agreements between fuel-cell supplier Ballard and several bus manufacturers. Additionally, there are lots of standing orders in countries like Germany, Italy, France, Spain and the UK.

First quarter performance

In the first three months of 2024, electric buses held a 14% share of the market. This was the same as in the first quarter of 2022, but 2pp down on the same period last year.

However, in terms of volumes, the market finished the quarter with registrations increasing by 7.6% year on year, with more than 1,600 units registered.

The electric-bus sector is not the only one struggling. Fuel-cell buses saw their market share decrease 1.5pp to a 0.5% hold, while hybrids dropped 3pp to 9%, and alternative fuels declined 1pp, to a 5% market share.

As local manufacturers work hard on their products, competitiveness is growing, and it is possible to choose from a larger variety of buses. During the first quarter of 2024, First Bus (Wrightbus) led the way, with an 11.3% share, followed by Daimler with 10.7% and VW Group, through its Traton Division, with a 9.4% share.

Looking ahead

Despite domestic brands leading the way in 2023, taking the top two positions in the electric-bus manufacturers chart, it is likely that Chinese OEMs will fight back. With very low production costs, these brands can be more competitive when it comes to pricing, which may entice buyers.

Some local manufacturers are claiming that Chinese brands are heavily subsidised by the country’s government, and this leads to an unfair advantage in the European market.

It is, therefore, expected that Brussels will be keeping a close eye on the electric-bus market to ensure that competition is fair. Those countries that are not governed by the EU will also likely be watching the situation.

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Is bigger really better for BEV batteries?

Autovista24

Bigger batteries may remedy range anxiety, but smaller power-storage units can reduce costs and purchase prices of battery-electric vehicles (BEVs). Dr Christof Engelskirchen, chief economist of Autovista Group (part of J.D. Power), explores the economies of smaller batteries.

As the BEV market develops, with carmakers introducing new models, not all brands offer a variety of battery-size options. This is a valid approach, as focusing on larger power-storage units helps to tackle both range anxiety and charging anxiety.

This means peace of mind and conveys an impression of being future-proof. This is especially true as charging infrastructure continues to develop across Europe, where it currently may struggle to meet demand.

Few will question the logic of choosing a larger battery, while selecting a smaller one may raise some eyebrows. But is it rational to opt for the biggest battery unit available, especially as it is the most expensive BEV component? The short answer is ‘it depends’.

To understand whether bigger really is better, some facts need to be unpacked. This can be achieved by comparing the standard and the long-range variants of the Tesla Model Y and Volvo EX30, with a focus on the rear-wheel drive (RWD) single-motor variants.

The Model Y was not only the best-selling car in Europe last year, but it also took the global title. Meanwhile, the recently introduced EX30 emphasises mass-market compatibility, in a vehicle segment where this has been absent for so long.

The cost of greater range

When comparing online transaction prices for new vehicles after fees and applicable company discounts, the initial challenge for bigger batteries is revealed. An additional range of approximately 140km costs between €3,400 and €4,500 (net). This price increase is smaller for Tesla than for Volvo, both in absolute and relative terms.

As a side note, the Model Y is attractively priced, and Volvo needs to offer an additional discount of €2,100 (net) to maintain the required distance between transaction prices. The larger Model Y also offers three times the boot volume of the EX30, while also being around 50cm longer and nearly 10cm taller and wider.

Transaction price difference by battery size for Tesla Model Y and Volvo EX30 in Germany

BEV batteries
Source: Manufacturer websites and Autovista Group analysis.

Note: € values are net (exclude VAT). Data from May 2024.

Surprisingly, the WLTP consumption figures do not differ much between each model’s battery variants. In fact, the long-range versions seem to operate more efficiently. Both carmakers use different battery technologies according to the intended range. Their smaller batteries use a lithium-iron-phosphate (LFP) chemistry, while the larger units use a lithium nickel manganese cobalt oxide (NMC) makeup. This is the primary contributing factor to the different battery efficiencies.

Small and economic?

So, how are battery sizes handled in leasing contracts of 36 months and 60,000km? Under its business leasing offer, Tesla charges a moderate €42 (net) per month for more range. This takes the range of the Model Y from an already considerable 455km (WLTP) to 600km (WLTP).

Across one year this accumulates to €504 of additional cost, and roughly €1,500 over three years. This is less than half of what would be paid if the vehicle was purchased outright.

Care by Volvo, the carmaker’s long-term rental and subscription service model, sits at a monthly premium of €59. This adds up to €708 a year and approximately €2,100 over three years. Under this plan, the EX30 goes from a lower range of 337km (WLPT) to a solid 476km (WLTP).

Despite these relatively small uplifts, the price still clearly points towards the smaller battery being the more economical choice. However, it is important to consider how usage impacts utilisation costs. When driving in higher-mileage scenarios, BEVs with a smaller range may require substantially more frequent public charging stops, which are more expensive and less convenient.

Testing with two scenarios

Two scenarios can be used to simulate these economic conditions, alongside certain assumptions.

In the first scenario, 80% of the annual 20,000km mileage covers short trips where all charging takes place at home or the workplace. Here, electricity costs are comparatively lower, at €0.25 per kWh (net) in Germany.

The remaining 20% of the annual mileage (4,000km) is made up of long-distance trips. This consists of four short weekend or business trips of 500km each and two larger journeys of 1,000km each.

It is assumed that the driver charges the vehicle to 100% ahead of each trip. Additionally, public charging points are only used when the remaining range reaches 40km, at which point the battery is recharged to 80%. This makes sense in terms of convenience, as it takes roughly the same time to charge from 20% to 80% as it does from 80% to 100%. The costs of fast charging at public infrastructure are set at €0.5 per kWh (net) in Germany.

For the sake of simplicity, real-life ranges are assumed to be 80% of the respective WLTP values for short distances and 65% for longer journeys, conducted at much faster speeds. These assumptions are in line with real-life consumption levels which have been observed, recorded and published in the public domain. Regardless, the overall results are not sensitive to these assumptions.

In the second scenario, the driving pattern is modified so that half of the mileage, 10,000km, is spent on longer trips. This equates to 10 weekend or business trips of 500km each and five longer journeys of 1,000km. The remaining assumptions are unchanged.

Smaller cost savings

Under these scenarios, public-charging costs come down when switching from a short-range model to a long-range one. This is the case for both the Model Y and the EX30, however, the savings are not as significant as some might hope.

The annual cost savings accrued due to less public charging is only between €59 and €62 a year in scenario one and between €149 and €154 in scenario two. Savings partially erode as the car still needs to be charged, albeit at more affordable domestic or company wallboxes.

Annual cost difference when moving from a standard to a long-range BEV in Germany

electric vehicle
Source: Manufacturer websites, Autovista Group research and analysis.

Note: Leasing rates and charging costs are in € and net (exclude VAT). Vehicles are held for 36 months and the annual mileage is 20,000km. The starting point of ‘lease rate short range’ comes from manufacturer websites and represents the annualised monthly business rate. To balance this comparison, the Tesla Model Y has €111 added each month for insurance. This is because the carmaker does not include insurance in its offer, but Volvo does. Data is from May 2024.

Overall, with net cost savings, it is still more economical to opt for the smaller battery in both scenarios. This means the total cost of ownership (TCO) advantages remain for the smaller battery versions after simulating the more expensive stops at public chargers.

There is a noticeable difference between Tesla and Volvo. The annual TCO difference for the Model Y is only between €406 and €475 in both scenarios. This is because of the smaller premium required for the long-range model versus the standard-range version when compared to Volvo. For the EX30, the TCO difference is between €614 and €669 per year when choosing the larger battery over the standard one.

Calculating convenience

The added convenience of fewer public charging stops must also be considered for those BEVs with a bigger battery.

The standard Tesla Model Y offers such a good range it can handle the use case of scenario one quite well, requiring only 16 stops a year. Meanwhile, the long-range version reduces the annual number of stops from 16 to 10.

Here, the case for a smaller battery may be economically apparent, but for many people, the long-range version offers added flexibility at a small additional cost.

The longer-range variant of the Volvo EX30 reduces the number of stops more significantly from 26 to 16. Therefore, the added convenience of the longer-range version is considerable, but then so is the price premium. This makes it a tie in terms of choice, with budget and actual use case the likely deciding factors.

In scenario two, the standard-range Model Y makes 40 stops a year at public chargers. This will be enough to push most customers towards the long-range version. The TCO disadvantage of the bigger battery comes down to only €406 a year, or €27 per saved stop.

Similarly for the EX30, investing the additional €614 a year in scenario two would make sense. This would bring the stops down to 40 from 65 with the standard range version and costs €25 per saved stop.

A balanced decision

So, if the price or leasing rate increase for a larger battery is small, going big will mean an extra layer of convenience and security. This also reduces stress on developing infrastructure, with more stops requiring more chargers.

If the cost uplift is more substantial, smaller batteries will still deliver, while remaining the more economical choice. This is especially true if shorter trips define a person’s driving pattern.

However, when longer journeys underline a person’s driving pattern, it will be worth assessing the number of stops needed with the given battery variant. This will ensure a well-balanced decision between added costs, extra flexibility and greater convenience.

This content is brought to you by Autovista24.