TECH - Europe's EV Tariffs Seen As Minor Speed Bump For BYD | Benzinga
Key Takeaways:
- The EU’s proposed tariffs on Chinese EVs turned out to be lower than feared, especially for BYD
- Chinese EV companies are expected to accelerate efforts to set up factories in Europe to minimize transport and tariff costs, while seeking growth in Asian markets
By Fai Pui
The European Union has thrown a roadblock in the path of China’s electric car industry with a proposed package of import tariffs. But as far as investors are concerned, the extra costs may just be a bump in the road for the country’s top EV producer.
The policy would apply tariffs of up to 38.1% on Chinese electric cars in what EU leaders describe as a defense against unfair competition. While Europe joined the United States in outlining punitive action, its response was far less aggressive than the 100% tariffs imposed from Washington.
A layered EU tariff system also means that some Chinese EV makers will be less penalized than others, notably domestic market leader BYD Company (OTC: BYDDF)(OTC: BYDDY), whose shares jumped in a relief rally.
Policy makers set the tariff levels after investigating the impact of Chinese auto subsidies, taking account of the extent to which EV makers cooperated with the probe. The results were 17.4% tariffs for BYD, 20% for Geely Automobile (0175.HK) and a top-tier 38.1% for SAIC Motor (600104.SH).
The rates are set to be imposed from July 4, barring any challenges or last-minute bargaining, on top of an existing 10% import duty for non-EU vehicles. In effect, BYD will face the lowest tariff barrier among Chinese auto manufacturers at a combined 27.4%.
After the news broke on June 12, BYD shares rose 8.8% and Geely’s stock price was 4.6% higher at one point. Shares in three other emerging EV stocks, Nio (NYSE: NIO), XPeng (NYSE: XPEV) and Li Auto (NASDAQ: LI), showed a muted reaction.
Investors are betting that, at these tariff levels, the bottom ...