The UK is mulling over imposing sanctions on China if its electric vehicle influx risks affecting the nation's car market with cheaper options.
Transport Secretary Mark Harper has warned that if China tries to undercut competition for electric vehicles in the UK by making prices too low, he will take action.
Speaking at the Society of Motor Manufacturers and Traders (SMMT) conference, Harper stated that the UK could be pushed to put tariffs on Chinese imports of electric vehicles.
In Europe, tariffs are already in place. Currently, Chinese EVs are subject to a 10 per cent tariff when imported to Europe, while European carmakers pay 15 per cent when exporting to China.
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Chinese EVs are subject to a 10 per cent tariff when imported to Europe
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The European Commission launched an investigation in October over the imports of battery electric vehicles from China.
European Commission President Ursula von der Leyen said that the global market is flooded with cheaper electric vehicles where the price is kept artificially low owing to huge state subsidies from China.
According to the Commission, the share of EVs from China sold in the EU jumped from less than one per cent to eight per cent last year, with worries that this share could soar to 15 per cent by 2025.
Since 2009, China has used a variety of subsidies to scale up BEV production, boost market penetration and build a charging station infrastructure to help achieve its global leadership.
Addressing the automotive industry, Harper said that while competition is fair, British manufacturers need to be at the heart of it.
The Transport Secretary said that appropriate steps are being taken to ensure they have a seat at the table to compete with anybody in the world domestically but also exporting technology around the world.
He added: “We have very robust measures in this country with a trade remedies regime making sure we have fair international trade and that we don't have dumping or unfair subsidies.”
Recently, Luca de Meo CEO of Renault Group, warned that Europe is facing a complicated equation. It should be protecting its EV markets, but it is dependent on China for its supplies of lithium, nickel and cobalt.
Since 2012, China has had a major competitive advantage across the entire EV value chain thanks to low production costs and availability of resources.
It controls 75 per cent of global battery production capacity, 80 to 90 per cent of materials refining and half of the mines producing rare metals.
De Meo stated that relations with China will need to be managed carefully to ensure that a bidding war is not created between the two manufacturing giants.
Completely closing the door to them would be the worst possible response, he warned.
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The Chinese share of EVs in Europe could soar to 15 per cent by next year
GETTYMajor Chinese brands have already started making moves into the European market, including BYD, NIO and Xpeng.