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Nations Begin Tightening The Screws On Chinese Electric Car Imports – CleanTechnica

Nations Begin Tightening The Screws On Chinese Electric Car Imports – CleanTechnica

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Let’s give China its due. As a nation, it has no peer at producing stuff in large quantities efficiently, thanks to generous support from the central government. To those inside China, that government support is normal. To those outside China, however, the level of involvement by the central government feels a lot like a subsidy, one that undercuts local manufacturers. The problem is especially acute when it comes to electric car production.

China today has dozens of electric car manufacturers who are cranking out new EVs at an astonishing rate. It almost seems like a real life version of Disney’s Fantasia, where hundreds of minions work nonstop hour after hour, day and night, to fulfill the misguided will of the beleaguered sorcerer’s apprentice.

As China gets closer to meeting its own electric car needs, many of its car companies are looking more and more to export markets to absorb some of their production. But for some countries, the electric car onslaught coming from China is seen as a threat to local companies and their workers. The EV revolution was never intended to displace domestic industries and workers but that seems to be what is happening.

New Electric Car Incentive Rules In France

electric car
Dacia Spring no longer eligible for French EV incentives

In response, France and Turkey this week announced restrictions on electric car imports designed to stem the tide of Chinese EVs flooding their ports. In France, the new rules heavily favor cars manufactured domestically or elsewhere in the EU at the expense of Chinese made cars.

According to BFM Finance, 65% of the electric car models sold in France will be eligible for incentives, which will now be based partly on the amount of carbon emitted in the EV manufacturing process. The full list of eligible models, as reported by BFM Finance, includes 24 produced by Stellantis and five by Renault. The Tesla Model Y is eligible but not the Chinese made Model 3.

Electric vehicle brand MG Motors, owned by China’s SAIC, said it expects the new rules to weigh on the French EV market. “There are cars that will entirely lose their competitiveness,” an MG spokesperson told Reuters, adding that the brand had decided not to apply for the bonus scheme for its MG4 model because it was “designed to exclude us.”

France’s finance minister Bruno Le Maire hailed what he called the incentive for automakers to reduce their carbon footprint.

“Until now, the State has not set any conditions on the manufacturing methods of vehicles purchased with the bonus. Hundreds of millions of euros of public money therefore went to vehicles with a very poor carbon footprint. From now on, it’s over. To be eligible for the bonus, an electric vehicle must have a limited environmental impact, during the manufacturing and transport stages. We will no longer be subsidizing car production that emits too much CO2.”

The average retail price of an EV in Europe was more than 65,000 euros ($71,000) in the first half of 2023, compared with just over 31,000 euros in China, according to research by Jato Dynamics. The government said a third of all government incentives are going to consumers buying EVs made in China. That trend has helped spur a surge in imports and a growing competitive gap with domestic producers. China’s auto industry relies heavily on electricity from coal powered generating stations, which is why many Chinese made electric car models will no longer qualify for incentives.

Turkey Slams The Door On Chinese Electric Car Importers

Turkey is also being flooded with electric car models from China. EVs are becoming increasingly popular in Turkey, thanks to the relative affordability of Chinese brands, as well as the acclaim for domestic car manufacturer Togg and the recent arrival of Tesla. EV sales rose almost 10 fold this year through November from a year earlier, data from industry association ODMD show. They now comprise 7.1% of all passenger car sales.

But last month, the Turkish government imposed harsh new rules on foreign companies who want to sell electric cars in Turkey. By the end of this year, companies importing EVs must have at least 140 authorized service stations spread evenly across the country and open a call center for each brand, according to a Trade Ministry decree published in November.

The onerous requirement is widely seen as targeting Chinese vehicles. Imports from the EU and countries that have free trade agreements with Turkey are exempt from the decree. Importers have only until the end of the year to comply, a nearly impossible task for many.

Turkey is Europe’s sixth largest new car market. The new rules have spurred many importers to seek modifications or at least a delay so the tighter regulations won’t be so disruptive. “These rules are so tough, not a single brand is in compliance as of today,” Erol Sahin, chief executive officer of automotive consultancy EBS told Bloomberg. The biggest issue concerns the requirement that importers establish service stations themselves, which would complicate deals with authorized third party services, he said.

The new rules are intended to bring order to a rapidly developing industry and enable it to move forward in a controlled environment, an official in Ankara told Bloomberg, speaking on condition of customary anonymity. There are no plans to revise the rules or delay their implementation, the official said.

BYD, the top importer of electric car models into Turkey, plans a nationwide authorized service network and has been signing contracts with dealers to deliver services to customers, said Ismail Ergun, general manager of BYD Turkey. “If the rule is implemented as planned, imports may have to wait at the border for months,” he said.

“The rationale of the regulation is correct, as it aims to protect the customer,” said Kagan Dagtekin, CEO of Dogan Trend Otomotiv, which distributes several MG electric car models in Turkey . “However, one should be careful to not throw the baby out with the bathwater. Competition laws and fair approach for the existing dealer body should be taken into account.”

China sold $184 million worth of EVs to Turkey in the first 10 months of this year, almost double the figure in the whole of 2022. Earlier this year, Turkey imposed an added 40% customs duty on EV imports from China, raising the total customs tax rate to 50%, but still sales of Chinese electric car models keeps going up.

The Takeaway

Countries cannot ban the sale of imported cars directly because that would be a violation of World Trade Organization rules. But they have a number of tools at their disposal to slow the rising tide of imports. Whether those tools are couched in terms of environmental benefits or an adequate supply of in-country service locations, they are really little more than devices to implement a country’s political and policy objectives.

We actually applaud the French initiative to make carbon emissions a factor in the eligibility for EV incentives paid for by French taxpayers. China has built an awesome manufacturing empire that is powered largely by coal generating stations. If the world is to stand a chance of limiting global heating, nations will need such tools to force deep cuts in carbon emissions by their trading partners.

Turkey’s abrupt new regulations feel more designed to punish China for its embrace of Russia in its criminal assault on Ukraine. China is less concerned with human rights than it is with doing business and making profits wherever the opportunity arises.

China has established itself as the dominant force in electric car manufacturing globally, but such dominance always spurs resentments and now they are leading to new initiatives to rein in its dominant position in electric cars. The market giveth and the market taketh away.

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Lora Helmin

Lora Helmin

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