Reports indicate that the EU and china are close to reaching an agreement regarding additional tariffs on imported electric vehicles from china, with china possibly committing to establish a minimum price mechanism for electric vehicles exported to the EU. Although the specific details are still unknown, Paul Gong, head of china autos industry research at UBS investment bank, believes this is positive news for chinese carmakers because, compared to setting additional tariffs, establishing a minimum price can secure a profit level per vehicle for the companies.
Gong stated that setting a minimum price brings certain restrictions and obstacles to carmakers, and the choices for european consumers may also decrease; however, at the expense of sales volume, each company can earn more money on every vehicle sold. He also believes this measure can drive chinese manufacturers to export better auto products to europe, which will be beneficial in the long run for establishing "chinese brands."
He also believes that the chinese auto industry may start a new round of price wars earlier next year. In addition to the chinese new year being earlier than in previous years, around 20% of industry sales in September and October this year came from government-issued stimulus consumption subsidy policies, which to some extent have brought forward demand for early next year. After the subsidies are removed at the end of this year, consumers will continue to wait for better price levels next year, thus making price competition difficult to avoid.