German auto industry opposes EU tariffs on EVs from China

LONDON (ICIS)–Germany’s auto industry is opposed to tariffs on electric vehicles (EVs) from China, trade group German Association of the Automotive Industry said on Wednesday.

The group, known as VDA in its German acronym, was reacting to a European Commission proposal of tariffs on battery electric vehicles (BEVs) from China after an investigation concluded they benefited from unfair subsidies.

VDA said the proposed tariffs were not the right tool to strengthen the competitiveness of Europe’s auto industry.

Instead, the tariffs would further escalate the risk of trade conflicts, to the detriment of Germany’s automakers, it said.

“The fact is that we need China to solve global problems,” in particularly in dealing with the climate crisis, it said.

China played a crucial role in a successful transformation towards electromobility and digitalization, and a trade conflict would jeopardize this transformation, the group said.

However, VDA added that the extent of the subsidies China grants EV makers was “a challenge” for Europe and it called on China to make “constructive proposals” to settle the dispute.

Germany ranks first in Europe and second after China globally in terms of EV production, and the bulk of German EV production goes into export, according to VDA data released this week.

Industry observers have noted that Germany-based EV production relies on imports of materials and batteries from China.

The US last month announced tariff hikes on Chinese imports of EVs, batteries and other materials, starting 1 August.

In related news, the business climate in Germany’s automotive industry deteriorated in May amid fears about impacts on German automakers from the conflict with China, according to a recent survey by Munich-based ifo research.

The automotive industry is a major global consumer of petrochemicals that contributes more than one-third of the raw material costs of an average vehicle.

The automotive sector drives demand for chemicals such as polypropylene (PP), along with nylon, polystyrene (PS), styrene butadiene rubber (SBR), polyurethane (PU), methyl methacrylate (MMA) and polymethyl methacrylate (PMMA).

Additional reporting by Graeme Paterson

Please also visit the ICIS topic page Automotive: Impact on chemicals

Thumbnail photo shows a Volkswagen EV; photo source: Volkswagen