What major news did the European Union announce? How do institutions view this event?
On the evening of August 21st, Caixin reported that the European Union announced a message, which put pressure on Hong Kong stock market's auto stocks today. As of press time, NIO-SW (09866.HK), Leapmotor (09863.HK), XPeng-W (09868.HK) fell 4.73%, 4.45%, 2.90% respectively.
Note: Performance of auto stocks.
Regarding the news, the European Commission disclosed the draft decision to impose final anti-subsidy tax on pure electric cars imported from China, making slight adjustments to the proposed tax rates: BYD is 17.0%, Geely is 19.3%, and SAIC Motor Corporation is 36.3%. In addition, Tesla, as an export trader in China, implements a separate tariff rate, which is currently set at 9%.
The European Commission also decided not to retrospectively levy anti-subsidy taxes. On October 4, 2023, the European Commission initiated an anti-subsidy investigation into China’s electric vehicles. On July 4, 2024, the European Commission announced preliminary rulings and imposed provisional anti-subsidy taxes of 17.4% to 37.6% on Chinese electric vehicles. The final ruling will be made before November 4, 2024.
Institutions claim that this will accelerate overseas factory investments.
China Galaxy Securities pointed out in a recent research report that even after the European Union increased tariffs on Chinese electric vehicles, China's electric vehicles still maintain advantages in product and price. Although the price of Chinese cars has generally increased by more than 50% due to factors such as freight and tariffs after entering the European market, these adjustments have not weakened their price competitiveness in the European market. Even if a 20% tariff is imposed, the price of Chinese electric vehicles in the EU is still lower than that of similar products locally, maintaining a significant price advantage.
The research report further analyzed that the increased tariffs may prompt Chinese electric vehicle manufacturers to accelerate their production layout in Europe. By setting up factories in Europe, Chinese car companies can not only better respond to changes in the international market environment, but also avoid possible trade restrictions. The mature automotive industry supply chain in the EU provides favorable conditions for this local production.
The latest dynamic shows that BYD has announced the establishment of its first new energy vehicle production base in Europe in Hungary, marking an important step for Chinese car companies in the European production layout. At the same time, the investment of Chinese electric vehicle manufacturers in Southeast Asia is also increasing. SAIC, Great Wall, BYD, and NIO and other companies have invested in building factories in Thailand. BYD's Thailand factory is expected to start production soon, and the company also plans to build factory in Indonesia.