Big tariffs on imports of electric vehicles from China to the EU will be imposed after a majority of member states backed the plans.
The move to introduce tariffs is aimed at protecting the European car industry from being undermined by what EU politicians believe are unfair Chinese-state subsidies for its own cars.
Tariffs on electric cars made in China will rise by between 10% and 45% over the next five years, but there are concerns that such a move could raise electric vehicle (EV) prices for buyers.
The decision, which splits EU member states such as France and Germany, risks igniting a trade war between Brussels and Beijing, which has denounced the tariffs as protectionist.
China is relying on high-tech products to help revive its moribund economy and the EU is the country’s largest foreign market for its electric car industry.
Its domestic car industry has grown rapidly over the past two decades and its brands such as BYD have begun moving into international markets, prompting fears from the likes of the European Union that its own companies will not be able to compete on cheaper prices.
The European Union imposed varying degrees of import tariffs on different Chinese manufacturers over the summer, but Friday’s vote will determine whether they will remain in place for the next five years.
Tariffs were calculated based on estimates of how much Chinese state aid each producer received following the EU investigation. The European Commission has set individual obligations for three major Chinese EV brands: SAIC, BYD and Geely.
EU members are divided on tariffs. Germany, whose car manufacturing industry depends heavily on exports to China, was against them. Many EU members did not vote in the referendum.
German car manufacturers are protesting this. Volkswagen says the charges are a “misguided approach”.
However, France, Italy, the Netherlands and Poland have reportedly supported import duties. A tariff proposal can be blocked only if a qualified majority of 15 members vote against it.
Germany’s top industry association BDI called on the EU and China to continue trade talks on tariffs to avoid a “growing trade conflict”.
The European Commission, which conducted the referendum, said the EU and China would “work hard to explore alternative solutions” to what it called “harmful subsidies” of import tariffs on Chinese electric vehicles.
China’s Ministry of Commerce called the decision to impose tariffs “unfair” and “unfair” but said the issue could be resolved through negotiations.
The dispute has raised fears among industry groups outside the auto sector that China could face retaliatory tariffs.
The trade body for the French cognac industry said the French authorities had “abandoned us”.
“We do not understand why our sector is being sacrificed like this.
It said a negotiated settlement would “prevent us from facing an additional tariff that could exclude our products from the Chinese market”.
In August this year, EU registrations of battery-electric cars fell by 43.9% compared to the previous year, figures show.
In the UK, demand for new electric vehicles hit a new record in September, but orders were largely driven by trade deals and discounts from major manufacturers, the industry trade body said.
The Society of Motor Manufacturers and Traders (SMMT) said companies had “serious concerns that the market is not growing fast enough to meet mandatory targets”.
Ahead of a ban on new petrol and diesel vehicles, the industry has warned that drivers need better incentives to buy electric to help manufacturers. The deadline for the ban was pushed back from 2030 to 2035 under the Conservative government, but Labor has pledged to bring it to 2030.
Carmakers need to meet electric vehicle sales targets. Under the Zero Emission Vehicle (ZEV) mandate, at least 22% of vehicles sold this year must have zero emissions, with the target expected to reach 80% by 2030 and 100% by 2035.
Manufacturers who fail to meet the quota could be fined £15,000 per car.
Bosses at several car companies, including BMW, Ford and Nissan, wrote to CEO Rachel Reeves on Friday saying the industry could miss these targets.
Economic factors such as higher energy and material costs and interest rates mean electric cars are “stubbornly more expensive and consumers are wary of investing,” they said. Average cost of buying an electric car Around £48,000 in the UK.
They said a “lack of confidence” in the UK’s charging infrastructure was another barrier to encouraging people to switch to electricity.
