Import duty on electric cars from China – how will the used market be affected?

On October 4, 2024, a decision was made to extend the protective tariffs on electric cars manufactured in China. Increased tariffs are expected to drive up the prices of new electric cars in Europe, which could lead to lower new sales and a reduced pace of the electric conversion of the vehicle fleet. But how will the used market be affected? Karl Wahlin, analyst at our sister company Bilpriser , reflects.

The discussion about raising import tariffs on cars from China began in earnest in mid-2023. Some players in the European automotive industry, especially French car manufacturers, expressed concerns that Chinese electric cars, which are often heavily subsidized by the Chinese state, could create an unbalanced competitive situation in the European market. In September 2023, the European Commission launched an investigation into Chinese state subsidies for electric cars, which laid the groundwork for a potential increase in tariffs. The aim would be to protect the European automotive industry from unfair competition from China, whose models were rapidly gaining market share in Europe in line with the electrification wave.

Continued tariff hike hammered through

The standard duty for vehicles imported from countries that do not have free trade agreements with the EU has been 10 percent for many years, but in October 2023 the EU decided to introduce a temporary duty of between 17 and 38 percent for electric cars manufactured in China in addition to the already existing standard duty. The level of the temporary duty varies for different car manufacturers, and depends on how much the manufacturer is deemed to benefit from government subsidies from China and the extent to which it has cooperated with the EU during the investigation phase.

On 4 October 2024, a vote was held on whether to extend the increased safeguard duty on cars from China. Despite strong opposition from Germany, among others, it was decided that increased duties of between 7.8 and 35.3 percent would apply from November 2024 and for five years. Volvo and Polestar manufacture several electric car models in China and export them to Europe. Sweden advocated that the EU and China should strive to find a common solution rather than introduce tariffs that risk worsening relations, and abstained.

It should be noted that not all of the European car industry supported the increase in import duties on Chinese cars. For example, Volkswagen, Porsche and BMW have been among the strongest opponents of these measures, probably because they have significant sales interests in China. They may fear that Chinese countermeasures could negatively affect their sales.

Higher customs duties spill over into the second-hand market

A high proportion of electric cars sold in Sweden in recent years are manufactured in China, especially models in the lower price segments. Several car manufacturers have expressed plans to move production to other countries, but this will take time. The increased duty will be passed on to buyers, and we can therefore expect an upward shift in the average price of new electric cars. This should negatively affect new sales of electric cars, and will at the same time mean that the pace of transition to electrification of the vehicle fleet will slow down. Reduced inflow of electric cars, and assumed constant demand, will likely lead to a strengthening of the value of used electric cars.