EU Tariffs on Chinese EVs May Hurt Germany, Minister Says

Agatha Cantrill and Monica Raymunt
·2 min read
6

(Bloomberg) -- Germany could suffer if the European Union slaps additional import duties on electric vehicles made in China with any protectionist move risking retaliation, according to the country’s transport minister.

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“Germany’s economy depends on open markets,” Volker Wissing said in an interview with Bloomberg Television. “We should guarantee a level playing field but not work with subsidies or taxes.”

The European Commission last month announced a probe into alleged subsidies that the Chinese government has provided to Tesla Inc., BYD Co. and other local carmakers to produce and export battery-electric cars. The investigation, which also involves BMW AG and other western carmakers shipping China-made EVs to the EU, is expected to last roughly a year and could see Brussels impose additional import duties.

Read more: China Shies Away From Confrontation With EU Over EV Probe

Punitive duties have the potential to escalate into tit-for-tat moves hurting BMW, VW and Mercedes-Benz, all of which count China as their biggest single market. Mercedes-Benz Chief Executive Officer Ola Källenius, whose S-Class is China’s top-selling luxury vehicle, last month pushed back against protective measures, saying open markets were key to healthy competition.

China has supported local EV makers with subsidies for vehicle sales and production as well as access to land and cheap loans. Concerns about the impact of affordable, more tech-oriented EVs flooding the European market have grown in recent months, which would hurt especially mass-market carmakers like Volkswagen, Stellantis and Renault.

Read more: China’s Clean Car Exports Surge as Europe Starts Subsidy Probe

Wissing, who has led the transportation ministry since 2021, also said he supports the introduction of so-called synthetic fuels for a broad range of industries. Earlier this year, Germany’s lobbying to include e-fuels in the EU’s regulation to effectively ban new sales of combustion-engine cars by 2035 nearly derailed the legislation.

With little e-fuel available, Wissing still rejected the idea that the aviation and shipping industries should get priority access, even as they lack access to battery technology, saying distribution “can be left to the market.”

Read more: Lufthansa CEO Says Aviation Demand Leaves No Green Fuel for Cars

Competition for climate-neutral fuels will hamper the aviation industry’s ambitious target to become carbon neutral by 2050. Airbus SE is working on a hydrogen-powered aircraft that it wants to introduce by the middle of next decade. Airlines, meanwhile, are adding more sustainable aviation fuel — or SAF — into the mix, though many say there’s not enough to go around, making SAF an expensive source of fuel that will inevitably drive up ticket prices.

“To discuss where e-fuel use should be prohibited is not the right approach,” Wissing said.

Read more: Too Expensive, Too Scarce: Doubt Sets in On Green Aviation Fuel

--With assistance from Petra Sorge.

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