Rising tensions at Paris Auto Show amid looming EV tariffs

Chinese and European automakers showcased their rivalry at the Paris Motor Show on Monday as the European Union prepares to impose significant tariffs on Chinese made electric vehicles (EVs). Europe’s biggest automotive exhibition takes place at a crucial time for both regions: European manufacturers are suffering from slow demand and Chinese firms are trying to break into the fast growing market.

The proposed tariffs of up to 45% worried executives from both sides. Executive vice president of Chinese EV giant BYD, Stella Li, said that consumers may be impacted and asked, "Who pays the bill? Consumers. Instead, it will prevent poorer people from being able to buy." Such tariffs would 'ensure that Chinese companies go and build factories in Europe, and that exacerbates overcapacity in the region, possibly even resulting in the closure of factories,' said Stellantis CEO Carlos Tavares.

The nine Chinese brands featuring their latest models, including BYD and Leapmotor, are a change, as they represent just a quarter of the exhibitors for the year, compared with past years when they accounted for nearly half of them. This means European autmakers, who are adamant about defending their market share, are pulling out their big guns and overtaking by showing stronger form.

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The EU is moving to impose import duties because it believes China is heavily subsidising the industry and that the tariffs are necessary to counter that perceived unfairness. Beijing denied allegations of unfair competition and hinted at possible counter measures in its response. While Chinese manufacturers continue to push ahead with plans for Europe expansion, even as looming tariffs threaten to kill deals, Leapmotor wants to set up 500 sales points by 2025 and GAC is also warming up business in Europe.

Chinese EVs, such as BYD ones, have been competitive in terms of pricing to counter the lower margins at home, but the problem of getting brand recognition still prevails. BYD intends to raise its visibility in the market with the launch of it’s electric Sea Lion 07 SUV. But new entrants, including Dongfeng, Seres and FAW, are also vying for attention, as they fight a tough home market and price war in China.

Leapmotor International CEO Tianshu Xin projected that within two to three years, price parity with gasoline vehicles would be possible under pressures to keep prices competitive in Europe. The French government’s decision this week to cut further support for EV buyers has further complicated the picture, as it follows moves by Germany to end its subsidy program last year.