The EU had previously investigated Chinese companies and levied tariffs according to the level of state support to neutralize market distortion. Now, EU is dropping tariffs and instead creating a cartel for the industry.
The EU had previously investigated Chinese companies and levied tariffs according to the level of state support to neutralize market distortion. Now, EU is dropping tariffs and instead creating a cartel for the industry.
Aside from the issues that the article notes, I am skeptical that this is gonna work from a business protection standpoint, if protectionism is the state’s goal.
Say the issue is that VW cannot make EVs in Europe competitive with BYD in China. Labor or environmental regulation costs drive their costs up. Say BYD can make a car for 75% of what VW can.
The EU says “okay” and sticks a price floor in the EU Customs Union at whatever VW is selling at.
Ah, now the playing field is level! Or…is it?
Yes, BYD can’t undercut VW on prices now. But it still has that cost advantage. What BYD is going to do is to spend that extra money on adding more desirable features to their car. So now, at the price floor, you’re going to have a lackluster VW model and a really spiffy BYD model. Okay, maybe VW can ride on their reputation for a bit, but at some point, if BYD is consistently putting out better cars at a given price point, that’s gonna affect consumer views.
What I expect it will do is reduce the number of people buying EVs at the lower end of the market, where VW wasn’t making an entrant, so now those consumers will probably be getting a conventional vehicle instead of an EV.