The European Union (EU) has decided to renegotiate with China on eliminating the high tariffs imposed on Chinese electric vehicles. If tariffs are waived, the sale prices of Chinese electric vehicles in Europe will significantly decrease, which is expected to hurt Hyundai and Kia, who sell electric vehicles in Europe.
On the 10th (local time), Reuters reported that Maros Sefcovic, the EU Commissioner for Trade and Economic Security, agreed with Wang Wentao, China’s Minister of Commerce, to discuss setting minimum prices for exports instead of imposing tariffs on Chinese electric vehicles.
The EU has been imposing additional countervailing tariffs on Chinese electric vehicles since October of last year. The reason for the tariffs is that Chinese electric vehicles, which have significantly lowered prices due to unfair subsidies from the Chinese government, are disrupting the European market. The tariff rate applied to Chinese electric vehicles was previously 10%, but with this measure, it has increased to between 17.8% and a maximum of 45.8% for individual companies.
China has stated that it will not sell below a certain price for exports to Europe, but the two sides have been unable to narrow their differences in negotiations.
The resumption of negotiations between the EU and China regarding the elimination of electric vehicle tariffs, which had been at a standstill, is interpreted as a consequence of the recent tariff policies of the Trump administration. As the Trump administration declared a 'full-scale war' on high tariffs against both China and the EU, the two sides began seeking to improve their relationship.
With the export route to the United States effectively blocked, China must seek a breakthrough in the European market. Europe, which is experiencing difficulties in trade with the U.S., is also recognizing China's increasing importance as a new partner.
If Europe lowers or eliminates tariffs on Chinese electric vehicles, it will be difficult for Hyundai and Kia to avoid the impact. Korea does not impose tariffs on automobiles that meet the origin criteria under its Free Trade Agreement (FTA) with Europe.
Currently, Chinese electric vehicle companies are focusing on capturing the European market. BYD, the world's largest electric vehicle manufacturer, is selling the Atto 3, a small sports utility vehicle (SUV), along with the Dolphin, a small hatchback, and the Han, a sedan model. Prices vary by country, but approximately, the Atto 3 is sold for 40,000 euros (about 65 million won), the Dolphin for 33,000 euros (about 54 million won), and the Han for 69,000 euros (about 113 million won).
The Hyundai Kona Electric and Kia EV3 compete against BYD's flagship model, the Atto 3. The Kona Electric is priced at 41,600 euros (about 68 million won), while the EV3 is sold at around 36,000 euros (about 59 million won).
Currently, high tariffs are applied to Chinese electric vehicles, allowing Hyundai and Kia's electric vehicles to be sold at similar or even lower prices than Chinese cars. However, if tariffs are eliminated, this advantage will disappear. Given the situation where the Trump administration has decided to impose a 25% tariff on all imported cars, if the European electric vehicle market is lost to China, Hyundai and Kia will inevitably face a significant setback in their growth momentum.
An industry insider said, 'If tariffs are eliminated, the price-performance ratio of Chinese electric vehicles will become more pronounced and sales will rapidly increase,' adding, 'For Hyundai and Kia, there is now an emergency to protect the European market in addition to the U.S.'