The EU’s anticipated tariffs on Chinese Electric Vehicles could have little impact on the profitability of manufacturers, suggested research house Rho Motion at its Rho Motion Live Conference in Paris this week. Speaking to a room of industry leaders from the world of electric vehicles and the associated value chain, Rho Motion’s head of automotive research warned that Chinese EV makers could absorb up to a 30% trade tariff and still maintain a profitability rate comparable to their domestic market.

EU leaders are expected to announce an increase in their 10% levy to anywhere between a 25-50% tariff on Chinese EVs next week after the elections. This follows the news from the US of a 100% tariff on Chinese EVs which many experts have deemed a political move with little real impact on the market due to the low import volume from China.

As EU leaders consider what level of tariff to impose on Chinese EV makers, they will be balancing the fact that a thirty per cent tariff may not touch the sides of profitability for some key manufacturers. If provoked, the reaction and repercussions could lead to a trade war which would be devastating for a region that is still heavily dependent on Chinese dominated supply chains in order to achieve its lofty climate goals.

—Will Roberts, Head of Automotive Research at Rho Motion

The two-day conference dove deep into the electric vehicle value chain looking at charging infrastructure, battery technologies, battery recycling and the sourcing of raw materials.