Source: Gasgoo

On August 20, the European Commission published a final draft decision on the results of its anti-subsidy investigation into Chinese electric vehicles and adjusted some of the proposed tax rates.

Under the latest EU plan, companies that do not cooperate with EU anti-subsidy investigations will be taxed at a rate of up to 36.3 percent, down from a maximum temporary rate of 37.6 percent set in July. A general tax rate of 21.3% was imposed on other companies that cooperated with the investigation. In addition, the temporary tax rate of the three Chinese companies that the EU has previously sampled will be slightly reduced, including BYD's tariff rate from the previous 17.4 percent to 17 percent, Geely's tariff rate from the previous 19.9 percent to 19.3 percent, and SAIC's tax rate from the previous 37.6 percent to 36.3 percent.

The commission also said that Chinese companies in joint ventures with EU carmakers may also qualify for lower tax rates, rather than automatically applying the top rate, and that no retrospective duties would be imposed on these companies. For example, the EU reduced the additional duty on the electric MINI produced by BMW Group's Chinese joint venture Beambeam to 21.3 per cent, while a lower duty of 21.3 per cent will also apply to CupraTavascan models produced in China by SEAT, a Volkswagen Group brand, through VW's Anhui joint venture.

Tesla is listed as one of the companies cooperating with the EU investigation, which will also reduce the tariff rate of domestic cars exported to the EU, from 20.8 percent to 9 percent. Tesla had previously applied to the EU to recalculate its tariff rates based on the specific subsidies the company received. On Aug. 20, the European Commission confirmed that Tesla received less subsidies from the Chinese government than other Chinese electric car makers investigated by the EU, so the company's Chinese-made cars exported to the EU are also subject to the lowest tariff rate of all automakers.

Image Source: European Commission

It is worth noting that the above tariff rate is in addition to the existing 10% tariff.

After the draft is published on Aug. 20, automakers can request a hearing and have 10 days to submit comments. The Commission will then submit a "final decision" to EU member states, which will then vote on the regulation. Unless a specified majority (15 EU member states representing 65 per cent of the EU population) votes against it, the Commission's draft will be implemented.

The final rule is scheduled to take effect Oct. 30 and will be in effect for five years.

In response to the EU's latest draft decision, China's Ministry of Commerce said it was "firmly opposed and highly concerned", saying the draft findings were based on "facts unilaterally determined by the EU, rather than facts agreed between the two sides", and that China would take all necessary measures to protect Chinese companies.

Chinese carmakers have lost market share in the EU since the imposition of temporary tariffs in July. According to a recent estimate by Moritz Schularick, president of The Kiel Institute for The World Economy in Germany, the tariffs could cut Chinese car exports by a quarter, worth about $4 billion.