The European Union is raising regulatory barriers to require that parts production and research and development take place in Europe, following additional tariffs on Chinese-made electric vehicles. The move marks a forceful response after Chinese EVs rapidly expanded their share to 15%. Support measures such as production subsidies have become urgent for South Korea's auto industry, which has no defenses against Chinese EVs.
Germany and France agreed on the 16th of this month to tighten "Made in Europe" standards to protect their auto industries, according to foreign media including Hong Kong's South China Morning Post on the 19th. Starting in 2028, the two countries will require vehicles to undergo final assembly in Europe and to source at least 70% of parts value, excluding batteries, from Europe in order to qualify for government support or public procurement benefits. European content will in principle be limited to the EU's 27 member states, though conditional exceptions may be allowed for non-member countries such as Britain and Norway.
The EU introduced countervailing duties on Chinese-made EVs in October 2024, to apply for five years. The additional duty rates are 17.0% for BYD, 18.8% for Geely and 35.3% for SAIC Motor, levied separately from existing general auto import tariffs. On the 9th, the EU agreed with China to cap imports of Chinese hybrid vehicles at 350,000 units a year, about half the current level.
While the EU is belatedly stepping up its defenses against Chinese EVs, South Korea remains close to unprotected. The tariff on low-priced Chinese EVs is just 8%, and EV purchase subsidies are effectively no different for domestic and imported models.
Chinese-made EVs accounted for 35.0% of the total in the first half of this year, underscoring how deeply they have penetrated the market. Even so, the government is moving to exclude EVs from the domestic production tax credit, known as Korea's version of the Inflation Reduction Act. "The United States and Europe are expanding incentives under an America-first or Europe-first approach," said Kim Pil-soo, a professor of automotive engineering at Daelim University. "It is time to secure the competitiveness of Korean-made EVs through tax credits and R&D funding support."