Chinese officials reportedly instructed their automakers to halt investments in European countries that support higher tariffs on Chinese electric vehicles.
According to Reuters last 30 October, the warning comes after reporting earlier this month found Chinese automakers planned to stop expanding in Europe.
The move is considered as the first of many retaliatory measures that will come after the European Union finalized duty hikes of up to 45 percent on Chinese-made EVs. This came after planned negotiations between Brussels and Beijing to avoid increased tariffs fell through.
Beijing is taking a carrot and stick approach, however, seemingly rewarding countries that abstained or voted against the higher EV tariffs. On a diplomatic visit early this month, Finland was promised visa free entry for its citizens to China and greater cooperation on green energy.
Chinese EV companies have maintained strong leads this year: BYD reported a Q3 revenue of US$ 23.2 billion with about 1.1 million car sales in the three-month period — outpacing Tesla’s quarterly sales for the first time. However, BYD’s domestic price war with other Chinese EV makers means profit has taken a hit, with gross margins slipping by about 0.2 percentage points year-on-year.
The bloc’s vote on tariffs for Chinese EVs underscored the divisions between its member states, an expert at the European Council on Foreign Relations wrote. Countries like Germany and Hungary, which both rely heavily on China for trade and foreign investment, are finding themselves increasingly "at loggerheads" with more hawkish EU members like France.
"Beijing has long made dividing Western allies a priority in a bid to prevent the emergence of bolder European policies or even joint US-EU measures, such as export controls on critical technology, on China," the expert added.
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