The European Union recently unveiled provisional tariffs on imported electric vehicles (EVs) from China, ranging from 17% to 38.1% (Reuters, 2024, June 12). These new duties have sent shockwaves through the automotive world, as major Chinese EV manufacturers scramble to strategize their next moves.

BYD, sometimes cheekily referred to as "Build Your Dreams," will face the lowest tariff of 17.4%, allowing the company some breathing room to continue dreaming big in the European market (CNN, 2024, June 12). Meanwhile, state-backed SAIC gets the short end of the stick, slapped with the highest tariff at 38.1%, possibly making them wonder if the EU has some serious grudge against them (CNN, 2024, June 12).

Geely lands in the middle with a 20% tariff (Reuters, 2024, June 12), a situation akin to being neither first class nor economy—just somewhere uncomfortably in between. Although these tariffs will certainly slow the influx of Chinese EVs into Europe, they are not expected to bring it to a screeching halt (CNN, 2024, June 12).

BYD and other well-funded Chinese EV makers are not just sitting around, nursing their tariff wounds. They are considering setting up manufacturing facilities within Europe to sidestep these financial barriers (Reuters, 2024, June 12). When life gives you tariffs, build your factories on the other side of the customs checkpoint.

In addition, alternative strategies are being mulled over. Chinese companies may pivot to exporting hybrids or internal combustion engine vehicles (ICEs), which remain untouched by the new tariffs (Reuters, 2024, June 12). Diversification seems to be the name of the game—you can't put all your batteries in one basket.

The European Commission's announcement had an immediate impact on the stock market, with shares of major Chinese carmakers taking a nosedive. Nio dropped by 8.5%, Geely by 4.8%, and BYD by 3.7% (Reuters, 2024, June 12), proving once again that nothing makes investors panic quite like the word "tariff."

Set for provisional implementation in July, these tariffs may be finalized later in the year (Reuters, 2024, June 12; CNN, 2024, June 12). The duties exclusively target battery electric vehicles (EVs), while hybrids and internal combustion engines remain blissfully unaffected (CNN, 2024, June 12).

Chinese EV manufacturers are also exploring closer production venues such as Morocco or Turkey. These neighboring countries could serve as strategic outposts to skirt around EU tariffs (Reuters, 2024, June 12). When in doubt, go the scenic route.

The EU market is crucial for Chinese EV makers, with 38% of China’s EV exports heading to Europe in 2023 (CNN, 2024, June 12). In light of the new tariffs, there's already chatter about ramping up assembly plants within the EU itself, a development some member states aren’t altogether dismayed by (CNN, 2024, June 12).

Though whispers of retaliation by the Chinese government are circulating, experts believe it'll be short of a full-scale trade war—more like passive-aggressive posturing over the neighbor's fence (CNN, 2024, June 12).

Ultimately, while EU tariffs may slow down the entry of Chinese EVs, they're not likely to halt it. BYD and other EV manufacturers might even get creative—it wouldn't be shocking if they try their hand at electric rickshaws next. When it comes to navigating regulatory roadblocks, necessity drives innovation.

References