EU's Tariff Actions Against Chinese EV Makers
Last week, the European Commission released the pre-disclosure of the final ruling information of the anti-subsidy investigation against Chinese electric vehicles, among which SAIC Motor was imposed the highest tariff rate of 36.3%. Bloomberg pointed out that the harsh treatment SAIC Motor received from the EU is a warning case, showing that Chinese enterprises need to improve their coping ability when opening the Western market.
According to a 208-page interim tariff decision document released by the European Commission in July this year, the main factor for the EU to levy different tariffs on Chinese electric vehicle manufacturers seems to be the 'degree of cooperation in the investigation'. The document also specifically singled out a part to elaborate on the investigation situation of SAIC Motor, believing that SAIC Motor's response to the investigation is'severely insufficient'.
According to people familiar with the matter, SAIC Motor's unfamiliarity with the required documents and its internal bureaucracy are the challenges SAIC Motor is facing.
SAIC Motor has not yet commented on this. However, the company said on social media last month that the EU demanded sensitive business information, such as the chemical formula of the battery, and said that these requirements exceeded the scope of the investigation.
Why is BYD's tariff lower?
Among the three Chinese automakers named by the EU, SAIC Motor will be subject to an additional tariff of 36.3% for the electric vehicles it sells in Europe, which is more than twice that of BYD Company, and the latter needs to pay an additional tariff of 17% on the basis of the existing 10% tariff. The additional tariff of Volvo's parent company Zhejiang Geely Holding Group is 19.3%, ranking in the middle among the three companies.
People familiar with the matter said that SAIC Motor's response to the EU investigation is not sufficient enough, which forms a sharp contrast with the practices of its peers BYD and Geely, the latter actively hired international law firms and conducted comprehensive data collection. BYD also hired policy experts in Brussels.
'Looking at the differences in tariffs among different automakers, it's almost like a road map telling you who is better at local public relations or government lobbying.' Stephen Dyer, managing director of consulting firm AlixPartners, said. He said that one of the factors causing this difference may be the manufacturers' open attitude towards business cultural differences and their adaptability.
The importance of soft power
Bloomberg pointed out that this further proves that although Chinese electric vehicle manufacturers have an impressive share in the European automotive market, in terms of intangible influence, they have not shown the strength that a strong company usually has, such as the skills in the subtle game with EU negotiators and making their voices heard at global auto shows. Auto shows are the main social occasions for auto industry executives.
Dyer said that Chinese enterprises like SAIC Motor have multiple goals besides profits, which often makes them less flexible in situations such as cooperating with investigations.
Gregor Sebastian, a senior analyst at the US economic research firm Rhodium Group, said that given that Chinese electric vehicle manufacturers are unlikely to give up their plans to expand in Europe, better engagement with European civil society and regulatory systems will help them. He said that some Chinese enterprises may have underestimated the poli tical and legal challenges faced in entering the EU market and did not invest sufficient resources.
This deficiency of Chinese enterprises was manifested at the 2024 Stuttgart European Battery Show. This is a trade show that showcases the latest achievements in battery design and engineering. At this show, Chinese enterprises participated on a large scale, accounting for more than one-fifth of the total exhibitors. However, in the three-day seminar held simultaneously with the show, there were hardly any Chinese speakers on the same stage as many white auto executives, because most of them refused the speaking invitation.
Adapting to the European cultural environment
Jochen Siebert, managing director of consulting firm JSC Automotive, said that Chinese manufacturers need time to adapt to the new cultural environment, including media requirements, advertising and membership in industry associations. Siebert said that they still do not understand the importance of local journalists and commentators who play an important role in influencing the choices of European consumers.
Even BYD, which is imposed the lowest tariff by the EU, is not 100% correct in its practices. Now, the company's European website is patiently explaining to customers that NEV is not 'Neighborhood Electric Vehicle' but 'New Energy Vehicle'. Previously, BYD sponsored the 2024 European Cup, but frequently used the term NEV in marketing materials, confusing the public.
However, BYD at least pays more attention to these areas. Relatively speaking, BYD's long-term local rivals in China basically ignore these areas.
Stephen Dyer, managing director of consulting firm AlixPartners, said: 'This is a commonly mentioned truth. Suppose you and your friend are chased by a tiger, you don't have to run faster than the tiger, you just have to run faster than your friend.'
Original Title: The EU 'Heavily Penalizes' SAIC: Internal Bureaucracy Is the Fuse