Cars, Chinese manufacturers' margins resist European anti-dumping duties

Almost an accident on the road. The Chinese manufacturers of electric cars (Ev), after the formalisation of the anti-dumping duties decided by the European Commission, think more of a setback than of a definitive 'protectionist' choice. As for the government, the watchword from Beijing is to mediate. The duties will vary depending on the manufacturers: Byd 17.4%, Geely 19.9%, Saic Motor (the most damaged) 37.6%. Other manufacturers that cooperated in the EU investigation into subsidies (over 200 billion from 2009 to 2023, granted by Beijing to accelerate automotive growth and expansion) will be subject to a 20.8% duty, while it will be 37.6% for companies that did not cooperate.

The tariffs, which still have to be assessed by the 27 and enacted within four months, are in addition to the current 10% import duties, which would then rise to a maximum of 47.6%. Although, if one re-reads the Rhodium Group's calculations, despite such heavy duties a few Chinese players (Nio, for example) would see their profitability severely eroded or cancelled, to the point of having to give up exporting to Europe. The losers, paradoxically, would be Tesla and BMW. Precisely the German manufacturing and components bigwigs are among the biggest opponents of duties in Europe, due to their strong interests in China and fears of retaliation.

On the stock market, the immediate impact on China's electric vehicle manufacturers was evident, with shares in the sector dropping sharply. Only Byd managed to close Friday's session with a modest but significant +0.17%, demonstrating relative resilience compared to its competitors: the Shenzhen giant, the leading global manufacturer adding battery-powered and plug-in cars, would continue to gain, despite the new tariffs, according to Rhodium. As would, to a lesser extent, MG and Great Wall. On the other hand, Geely (which controls Volvo and Polestar as well as producing Smart cars in jv with Mercedes) saw its shares plummet by 3.10%. Xpeng fell 3.03%, Leapmotor 2.29%, Li Auto -1.92%, Great Wall Motor -0.84%, Nio -0.80% and Saic Motor (which has relaunched the British MG Motor brand: 2% of the European market in 2023) -0.58%.

"The new tariffs," comments Gabriel Debach, analyst at eToro, "could slow down Beijing's expansion into European markets, offering a chance for local manufacturers to respond and capitalise on the situation. While these tariffs are an obstacle for Chinese manufacturers, they could open up new market opportunities for electric vehicle manufacturers in Asia and Latin America. The global automotive sector could see a reorganisation of alliances and an increase in activities in regions outside Europe. The next moves by Chinese companies and global trade policies will be decisive in determining how these changes will affect the landscape in the months and years to come'.

One target continent is Africa. But South America and South East Asia also play a key role. On Thursday Byd inaugurated a plant in Thailand. And last night Turkish officials leaked that President Erdogan is expected to announce a deal for a $1 billion plant on Monday. The new factory could improve Byd's access to the EU, provided the cars comply with the customs union's rules of origin.