Chinese EV exports face brand hurdle in Western markets

Taxes and tariffs pose a hurdle for China’s EV manufacturers seeking to expand into Western markets, but even if/when they get past those they will still need to address issues around brand recognition and trust. 

Tariffs and taxes 

• Imports of EVs from China to Europe currently face a 10% tariff, but this could at least double as the EU tackles what it sees as state subsidies to Chinese manufacturers.
• The US imposes a 27.5% tariff on all imported Chinese cars, but there is a push to increase tariffs on EVs or even ban them altogether. 
• In addition, the UK and US are among several countries introducing new taxes or charges on EVs as they seek to replace lost tax revenues from fuel duties, actions which could significantly slow market growth.

Brand considerations 

• The position of China’s EV manufacturers has been likened to that of Japan’s automakers in the 1970s and 80s, when Japanese brands were perceived as being inferior to their Western counterparts. 
• Chinese manufacturers are arguably in a better position, having acquired Western brands like Volvo and MG. But that counts for little in terms of rapidly building credibility and trust when the marque being sold is unknown to buyers. 
• Many markets don’t carry such baggage, especially across Southeast Asia where EVs are becoming increasingly popular.
• “Chinese EVs are flocking to fast-growing markets like Thailand in droves,” Jacky Chen, general manager of carmaker Jetour’s international business, told the South China Morning Post. “We have the huge potential to unseat conventional carmakers’ leading positions there.”

What can Chinese brands do? 

Global Trade magazine suggests that Chinese automakers should initially focus on the fleet and rental markets, where cost is typically a more important consideration than brand. If they can generate significant sales in these markets then they can increase public familiarity, as well as amassing data on reliability, to be in a better position to penetrate the consumer market.

Sourced from South China Morning Post, Financial Times, Global Trade, BBC, Politico