BEIJING, January 12 (TMTPost)— A European consultant company expected vehicles made in China will remain a major force to drive auto imports in Europe this year despite the potential anti-subsidy tariffs.

Credit：Visual China

Vehicle imports in Europe could increase by 7% to 3.3 million between 2022 to 2024, representing an increase of around 100,000 units in volume, according to French auto consultancy Inovev. The growth scenario mainly results from the expected increase in imports of vehicles made in China by Chinese brands, the vast majority of which are battery electric vehicles (BEVs), Inovev said in a note earlier this week. The firm believes the increase in imports from China is correlated with the expected growth of the BEV market in Europe, since it expected around 40% of new light vehicles sold in Europe will be BEVs in 2030.

Inovev estimated China moved from tenth to second leading vehicle supplier country in just two years, namely, from 2021 to 2022. Such giant leap reflects auto imports made in China, especially, models of European brands produced in China like Dacia Spring, Tesla’s Model 3 and some of models under Volvo and BMW, have accelerated export to Europe, and the trend still lasts.

Nevertheless, Inovev noted, in the medium term, the share of imports from China could fall, driven by two major factors. One is the tariff on imports imposed by European govenments such as France, another is Chinese firms’ establishment of factories in Europe. BYD’s plan to build a EV facility in Hungary that recently announced is a good example .

The European Union officially launched an investigation into EVs from China on October 4.The European Commission is set to decide whether to impose tariffs more than the current 10% standard rate for cars within 13 months once the investigation started. The possible tariff will affect not just Chinese automakers but also foreign brands that produce vehicles there such as Tesla, Renault and BMW. The move may result in tariffs close to the 27.5% level already imposed by the U.S. on Chinese EVs, Bloomberg reported in September following the European Commission President Ursula von der Leyenan announcing about the EV probe plan. Global markets “are now flooded with cheaper Chinese electric cars”, and their price is “kept artificially low by huge state subsidies”, which is distorting European market, von der Leyen said in her state of the union stress to the European parliament on September 13. Head of the executive arm said Europe is open for competition, not for a race to the bottom.

BYD said last month that it will build a new energy vehicle (NEV) production base in Szeged, the third largest city in Hungary, and the base, which will be constructed in phases, is expected to create thousands of local jobs. It said that the new facility plans to leverage advanced process equipment and highly automated production processes to build the world's leading manufacturing base for NEVs, including including BEVs and plug-in hybrid electric vehicles (PHEVs). The construction of this production base will actively promote the development of the local economy, push forward technological exchanges and innovations between China and Hungary, and help Hungary build a green "ecosystem" with BYD's own advantages in the entire industry chain, the statement said.

BYD didn’t disclose how much it will invest in the new plant, which is poised to be its first plant to produce electric passenger vehicles in Europe, or any timetable about the project, neither did Hungary. Foreign Minister Peter Szijjarto said Hungary will provide subsidies for the BYD plant, but it will only publish the amount after receiving the European Commission’s approval. "This is set to be one of the biggest investments in Hungarian economic history," Szijjarto said.

In the short term, the impact of the EU investigation on China's auto exports will be relatively limited, as it will take some time for EU to conclude the probe, determine to impose the new tariff, commented Xiong Yuan, the chief economist of Chinese investment firm Guosheng Securities, reported Chinese newspaper the Global Times. In additional, the investigation has uncertainties since China has discontinued it direct subsidies for EVs in the start of 2023, and the EU clash over tariff will continue as cooperation between Chinese and European automakers are deepening,  Xiong noted. He expected the shocks from the anti-subsidy duties on China auto exports will be relatively controllable in the medium and long run.