Source: Securities Times
Author: An Yufei

According to media reports, three large auto companies in China and an industry institution have filed a lawsuit against the European Commission regarding the tariffs imposed by the EU on imported electric vehicles. The documents submitted to the EU's second-highest court, the "General Court of the European Union," located in Luxembourg, show that $BYD COMPANY (01211.HK)$ 、 $GEELY AUTO (00175.HK)$ and$SAIC Motor Corporation (600104.SH)$Lawsuits have been filed against the countervailing tariffs imposed by the EU on electric vehicles manufactured in China last year.

Three auto companies 'counter' the EU countervailing tariffs.

On October 29, 2024 local time, the European Commission announced the conclusion of the countervailing investigation and decided to impose a final countervailing duty on imported electric vehicles (BEV) from China for a period of five years, which will officially take effect on October 31, 2024.

Specifically, BYD is subject to a 17% countervailing duty, Geely a 18.8% countervailing duty, SAIC Motor Group a 35.3% countervailing duty, other cooperating companies a 20.7% tariff, and non-cooperating companies a 35.3% tariff. While$Tesla (TSLA.US)$after requesting an individual review, a 7.8% tariff was imposed.

In response, a spokesperson for the Ministry of Commerce stated that China has repeatedly pointed out that the EU's countervailing investigation into electric vehicles from China has many unreasonable and non-compliant aspects, and that it is a protective measure that acts as 'unfair competition' in the name of 'fair competition'. China does not agree with or accept the ruling results and has filed a lawsuit under the World Trade Organization dispute resolution mechanism. China will continue to take all necessary measures to firmly protect the legitimate rights and interests of Chinese enterprises.

Lin Xianping, Secretary-General of the Cultural and Creative Research Institute of Zhejiang University's City College, stated: 'The main purpose of the EU imposing countervailing duties on electric vehicles is to protect its local electric vehicle industry and avoid being impacted by imported similar products. The tariffs for Tesla are much lower than those for other electric vehicles, which may be due to the EU believing that Tesla provided more cooperation and information during the investigation, or that its products performed better in other aspects. This tax rate is a decision made by the EU based on the investigation results, and companies can appeal this decision.'

On October 30, 2024, SAIC Motor Corporation responded that the EU Commission's anti-subsidy investigation involves commercially sensitive information, claims of subsidies are mistaken, and has overlooked some key information and objections submitted by SAIC, resulting in inflated subsidy rates on multiple items. SAIC has provided thousands of documents and written evidence through various means including submitting questionnaires, written objections, and statements at hearings to conduct a legal defense.

SAIC Motor Corporation stated: "SAIC deeply regrets the EU Commission's final ruling and intends to take necessary legal measures to sue this case in the EU Court, safeguarding its legitimate rights and interests."

Currently, three Chinese car manufacturers, BYD, Geely, and SAIC, have filed lawsuits against the anti-subsidy tax imposed by the EU on electric vehicles made in China, and the EU Court has not provided further details regarding the case.

Chinese car companies are accelerating their overseas expansion.

Although Chinese car companies are encountering international trade challenges, including the EU anti-subsidy tax, going abroad has become a "compulsory course" for these manufacturers. In 2024, China's automobile export volume achieved a significant leap.

Cui Dongshu, the secretary-general of the Passenger Vehicle Association, stated that in December 2024, China is expected to achieve exports of 570,000 vehicles, representing a year-on-year growth rate of 25% and a quarter-on-quarter increase of 5%, with both year-on-year and quarter-on-quarter trends improving. For the whole year of 2024, China is expected to achieve exports of 6.41 million vehicles, with a year-on-year growth rate of 23%.

From the perspective of specific car companies, BYD, Geely, and SAIC Motor Corporation all saw substantial increases in their automobile export volumes. In 2024, BYD's Passenger Vehicle sales reached 4.2504 million units, a year-on-year increase of 41.1%. Among them, BYD's overseas sales of Passenger Vehicles reached 417,200 units, a year-on-year increase of 71.9%, with the growth in overseas sales outpacing the overall sales growth.

The rise in automobile export data is backed by BYD's continuous expansion into overseas markets. In January 2024, BYD established a factory in Hungary. In June 2024, the first batch of new energy vehicles was officially rolled off the production line at BYD's Uzbekistan factory. In July 2024, BYD's factory in Thailand was completed. In December 2024, BYD's second roll-on/roll-off ship, "BYD CHANGZHOU", set sail for Europe. In January 2024, BYD's third roll-on/roll-off ship, named after the Hefei factory, "BYD HEFEI", was successfully delivered and set off.

$GEELY AUTO (00175.HK)$In 2024, total sales reached 2.1766 million vehicles, a year-on-year increase of 32%, exceeding the annual sales target. Among them, Geely Autos' overseas exports reached 0.4039 million vehicles, a year-on-year increase of over 53%. The company launched 16 new models in over 40 countries, and there are more than 900 overseas sales and service outlets. From the perspective of New energy Fund brands,$ZEEKR (ZK.US)$Listed on the New York Stock Exchange in the USA, the number of global operating stores has reached 538.

In 2024, SAIC Group's terminal vehicle delivery volume reached 4.639 million vehicles, of which self-owned brand sales reached 2.408 million vehicles, accounting for 60% of total sales. SAIC Group's overseas delivery volume reached 1.082 million vehicles, a year-on-year increase of 2.6%.

In 2024, it is also the year for SAIC Group to "build ships, manufacture vehicles, and create docks," focusing on honing internal skills for transoceanic ventures. In January 2024, SAIC Group's 31st auto transportation ship was launched, with China's largest clean energy vehicle transportation ship, "SAIC Anji Shencheng No. 1," making its maiden voyage. In July 2024, SAIC Group's 32nd auto transportation ship, "SAIC Anji Jincheng No. 1," was delivered, becoming the "twin stars of self-operated routes in Europe" alongside Shencheng No. 1. In December 2024, SAIC Group's 33rd ocean-going auto transportation ship, "Anji Weixin No. 1," was delivered and made its maiden voyage to Europe.

Overall, the EU's anti-subsidy tax is unlikely to shake China's auto companies' trend of going overseas. Yuan Shuai, deputy secretary-general of the Beijing Centergate Technologies Internet of Things Industry Alliance, believes that in the face of tariff barriers, Chinese electric vehicle companies need to increase their technological innovation efforts and enhance product competitiveness to maintain or expand their market share in the EU.

Editor/Rocky