Brussels Rejects China's Proposal for Minimum EV Price

BERLIN/SHANGHAI/BRUSSELS (Reuters) – Brussels has turned down a proposal from the Chinese government to sell imported electric vehicles (EVs) made in China at a minimum price of 30,000 euros ($32,946). This move aimed to prevent the European Union from imposing tariffs next month.

The European Commission had previously rejected minimum price offers from Chinese EV manufacturers as part of an ongoing anti-subsidy investigation that has led to significant trade tensions between Beijing and the EU, marking their largest trade dispute in a decade.

Details regarding the compromise proposals discussed during negotiations remain unclear, as sources declined to reveal their identities due to confidentiality.

China's Commerce Ministry and the European Commission have yet to provide comments.

According to 2023 data from JATO Dynamics, electric vehicles in China cost about half as much as those in Europe and the United States, primarily due to various cost advantages and heavy governmental subsidies. In the first half of 2023, the average price of a battery-electric car in China was around 32,000 euros ($35,126.40), whereas the average price in Europe was approximately 66,000 euros. Furthermore, cheaper models currently under development in Europe are not expected to enter the market until at least 2025.

Brussels clarified that the rejection of the Chinese proposal encompasses not only the selling prices of EVs but also the subsidies that manufacturers receive during production.

Chinese companies, including SAIC and BYD, are positioning their EV models just above 30,000 euros in Europe, even though they are priced much lower in China, showcasing their adaptability in the European market. BYD’s Seagull is anticipated to debut in Europe next year around 20,000 euros.

Deadline Approaching for Trade Negotiations

The timeframe to reach a negotiated solution is dwindling, as the Commission has indicated that tariffs of up to 45% on Chinese-built EVs will be imposed starting Oct. 31 for five years unless an alternative agreement is reached.

In response to the EU's vote in favor of the EV tariffs, China enacted temporary anti-dumping measures on imports of brandy from the EU, significantly impacting French brands like Hennessy and Remy Martin.

China's Commerce Ministry has expressed a desire for flexible pricing commitments as an alternative to tariffs, though specific details have not been disclosed.

The European Commission is open to reconsidering other pricing options, including minimum prices and import quotas, as discussions continue. Possibilities for a deal may include individually calculated minimum prices for each car manufacturer and possibly for specific models, tailored based on the car's size and range. According to one source, setting minimum price levels between 35,000 to 40,000 euros might provide a more effective basis for negotiations.

($1 = 0.9110 euros)