BMW’s pure electric MINI may suffer a “devastating blow”, the problem lies in its hometown in Europe

A month ago, President Biden quadrupled U.S. tariffs on Chinese electric vehicles to 100%;

A week ago, the EU said it would impose additional tariffs of up to 38% on electric vehicles produced in China.

As China's new energy vehicles accelerate their overseas expansion, Europe and the United States, as traditional powers in the automotive industry, have invariably opened up a new front to deal with the threats of new forces and buy time for their respective new energy vehicle companies to catch up.

But what’s interesting is that although they both raised tariffs, this round of adjustments by the United States and the European Union had different impacts.

One seeks the enemy in the void, and the other suffers eight hundred losses.

The big stick of tariffs is swung at Chinese trams

An unnamed scholar from the School of International Relations at Jinan University recently said in an interview with the media that the EU's goal is to maintain a "fair environment" in its own electric vehicle market, while the United States seeks to maintain its leading position in the global electric vehicle field.

Based on two different goals, the EU and the United States have very different approaches.

The EU used trade tools against China, and its investigation spanned 13 months. In contrast, the United States politicized the issue of electric vehicle imports, defined it as a safety issue, and made hasty decisions in the short term.

However, whether it is seeking "fairness" or for "safety", in fact, the actions of both parties have extremely limited impact on China's pure electric vehicles .

In the United States, there are very few electric vehicles produced in China. The only one available is the Polestar brand owned by Geely Group, which sold only 2,217 vehicles in the United States in the first quarter. Polestar said that the new Polestar 3, which will be delivered in the United States starting this quarter, will be produced at a plant in South Carolina to avoid high tariffs; the Polestar 4 will be produced at the Renault Korea Automobile Plant in Busan, South Korea.

After all, it is also an auspicious place.

In Europe, there are three Chinese car companies that have received special attention from the EU: SAIC, Geely Automobile, and BYD.

In October last year, the EU launched a countervailing investigation and required the three Chinese car companies mentioned above to provide information to assist in the investigation. By May this year, Reuters quoted sources as saying that the European Commission formally warned the three companies mentioned above that they had not provided sufficient information – usually, such a result would lead to higher tariffs.

And in the end it was.

The European Commission said last week that if it fails to negotiate an effective solution with the Chinese government, the tariff policy will be implemented from July 4. Among them, the three sampled Chinese car companies, SAIC, Geely, and BYD, will be levied tariffs of 17.4%, 20%, and 38.1% respectively.

Other Chinese car companies that "cooperate with the investigation but are not sampled" will be levied a weighted average tariff of 21%, while other Chinese car companies that "fail to cooperate with the investigation", like SAIC, will be levied a 38.1% tariff. The above tariff policy will be imposed on the existing tariff rate of 10%.

This means that if the EU's existing 10% tariff is included, the actual tariff for some Chinese car companies in the European market will reach 48.1% in the future .

The EU is the world's second-largest electric vehicle market after China, with the auto industry providing nearly 13 million jobs to the 27-nation bloc. Last year, the value of electric vehicle imports from China reached $11.5 billion, and in 2020 it was only $1.6 billion.

It should be noted that although these electric cars are all produced in China, not all of them are Chinese brands.

It is true that SAIC, Geely, and BYD are leaders in China's exports to Europe, but they are not the largest exporters . The two largest exporters are actually Tesla from the United States and Dacia, a subsidiary of French Renault. The former is Tesla's sole proprietorship and is produced in Shanghai and exported to Europe; the latter is a joint venture between Renault and Dongfeng and other companies and is produced in Hubei.

▲Dacia made in China

In terms of proportion, nearly 50% of China’s pure electric vehicles exported to the EU are from Western brands such as Tesla, Volkswagen, and BMW. The annual sales volume of Chinese brands in Europe is less than 200,000 units, and their market share is Less than 8%.

Another data shows that in the first four months of this year, the European market contributed only 1% to 3% to the total sales of SAIC, Geely and BYD. Polestar, which is greatly affected, will also move the production of corresponding models to Europe.

However, according to the forecast of the European Federation of Transport and Environment, Chinese car companies will reach 11% of the market share in 2024 and 20% in 2027. In other words, this round of EU tariff adjustments has indeed slowed down the overseas expansion of China's pure electric vehicles to a certain extent, but before that happens, a large number of European brands will be the first to be hit.

A research report by Rhodium Group shows that tariffs of 15%-30% will not cause Chinese brands such as BYD to withdraw from the European market, but may cause the business of companies such as BMW to plummet .

The most injured person is BMW

Imposing tariffs is the wrong approach.

BMW Group CEO Oliver Zipse said at an analyst meeting after the earnings report that European car companies may receive counterattacks from China.

Before the EU issued its statement, my country had warned it that it might increase tariffs on fuel vehicles, agricultural products and aviation products from Europe.

In January this year, it announced an anti-dumping investigation into brandy, cognac and pork produced in the EU. On the other hand, my country may also impose a 25% tariff on large-displacement cars imported from the EU and the United States. Obviously, this will have a great impact on the sales of high-end luxury models from brands such as Mercedes-Benz and BMW in China.

China is BMW's second largest market after Europe, accounting for nearly 32% of its sales in the first quarter. Not only that, BMW also produces iX3 and other complete vehicle products in China and exports them to Europe.

Zipzer said that BMW, like many European car companies, is very dependent on China not only for the production of complete vehicles, but also for parts and raw materials. " There is not a single car in the EU that does not have parts that do not come from China ," he said.

Kang Songlin, CEO of Mercedes-Benz, another well-established German car company, said in public that what the EU needs to do is to further reduce import tariffs on Chinese electric vehicles. The Volkswagen Group also wrote in a statement: "We believe that the negative consequences of this decision will outweigh any positive consequences."

But if you want to ask who is hurt the most, it is probably BMW.

At the 2024 BMW Group Night held in April this year, the MINI brand's first pure electric crossover model, the MINI Aceman, made its world debut, and the new electric MINI Cooper also officially debuted in China, announcing that MINI, a brand full of personality, has entered a pure electric era. The age of electricity.

This is undoubtedly a key step in BMW's pure electric strategy.

However, these pure electric MINIs may also face a 38.1% electric vehicle tariff. Reuters reported in the report: " This may have a devastating blow to the sales prospects of this mid-range car. " The reason why the highest level of tariffs was imposed was because Beam Auto did not cooperate with the EU investigation.

Beam Auto is a joint venture established by BMW Group and Great Wall Motors in 2018. It is located in Zhangjiagang, Jiangsu Province and is responsible for the development and production of MINI brand pure electric models.

Sources said that at that time, because the pure electric MINI model was still in the development stage, Beam Auto was unable to complete the European Commission's investigation and was therefore classified as a company that was "unable to cooperate with the investigation." According to the original plan, the pure electric MINI models produced by Beangguang Automobile will not only be sold in the Chinese market, but also exported to Europe to meet the BMW Group's carbon emission targets.

When BMW and Great Wall joined forces, BMW stated: "China has become the world's largest electric vehicle market, and localized production of MINI pure electric models has become a key factor in MINI's sustainable development."

But now, BMW MINI may become the first victim of high tariffs.

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