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Europe could announce new tariffs on Chinese-made electric vehicles as soon as next week, as the European Commission wraps up a months-long investigation into whether the Chinese government is providing unfair levels of support to its electric vehicle industry.
Not surprisingly, Chinese EV makers are upset by the allegations, with NIO CEO William Li becoming the latest to question the investigation during the company’s earnings call.
Li said tariffs on new energy vehicles, including battery electric vehicles and plug-in hybrids, go against the “sustainable development of all mankind”.
The EV CEO said NIO will adjust its strategy in response to the tariffs, and that sales in Europe are still “fairly modest” compared to the company’s total sales.
Other Chinese electric vehicle makers are also pulling out of Europe, with Great Wall Motors announcing last week that it would close its European headquarters and lay off its Europe-based employees.
The threat of a flood of cheap EVs from China has sparked a protectionist backlash in Europe and the United States. In mid-May, the United States announced it would impose 100% tariffs on Chinese-made EVs. Western officials argue that the Chinese government is supporting industries such as EVs to cover for its domestic economic problems, then dumping the subsidized products overseas.
Chinese authorities have previously criticized the European investigation as unfair, violating international trade rules and targeting only China, while Chinese automakers say their cars are cheap because of “operating efficiencies” and not government support.
Nio’s losses grows
While Chinese EV makers have had some success in overseas markets, NIO still makes most of its revenue in China, which has become an increasingly tough market due to an economic slowdown and fierce competition.
Nio reported that its shipments in the most recent quarter fell 3.2% from a year ago. The company’s adjusted net loss widened to 4.9 billion yuan ($677 million) from 4.1 billion yuan a year earlier. Nio has not yet turned a profit.
The company’s shares fell 7% in Hong Kong on Friday.
Nio has established itself as a premium brand since its founding in 2014. The company places emphasis on research and development and user experience, and offers battery swapping and leasing models in China.
China’s electric vehicle market is in a tough spot, with EV makers continuing to compete fiercely on price this year amid slowing sales growth and deep-pocketed new entrants like technology company Xioami looking to enter the industry.
Nio launched its mass-market brand, Onvo, in mid-May with the first deliveries planned for September. The company expects to deliver between 54,000 and 56,000 vehicles this quarter, up 138% from a year ago.
As of now, NIO has delivered 36,164 vehicles in the first two months of Q2 2024.
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