This GM and Chinese made EV costs just over $5,000. Allegedly, it costs less than adding CarPlay to a Ferrari. Source: Wired.
The European Union's recent decision to impose tariffs on Chinese electric vehicles (EVs) is more than just a trade dispute—it’s a glaring sign that economic concerns are beginning to overshadow environmental priorities.
As political leaders face mounting pressure to protect European industries, their once leading green policy is withering. More and more, it is overshadowed by the fear of economic decline in Europe. It goes to show that when environmental concerns come face to face with economic ones, the latter will win.
China’s rise in EVs is impressive. Nearly one in five of all electric vehicles sold in Europe last year were made in China. It is expected to surge to 25% in 2024, according to Transport & Environment (T&E). But EU officials argue that this lead is due to “unfair subsidisation,’ which allows Chinese produces to sell EVs at way cheaper prices than anyone else. In response, the EU has been increasing its tariffs against them, in a bid to make things fairer.
Under this decision is a battle between environment policy and economic self-interest.
China’s dominance in green tech is no accident. In 2022, China invested 70% more than the United States and the EU combined in the energy transition, according to economist Adam Tooze. With the benefit of the world’s largest manufacturing base, this investment is driving global efforts to decarbonise. Realistically, cheaper Chinese-made products are making green technology more accessible to the world. So why impose tariffs?
Cheap Chinese EVs are clearly helping Europe’s energy transition. However, if this undermines Europe’s car industry, support will evaporate. The industry represents about 7% of the EU’s GDP. Politicians and policymakers alike, are definitely aware of this.
There is already a protectionist trend. The economic fragmentation of Covid-19, including the shortages of essential goods, exposed the vulnerabilities of global supply chains. There is a growing political imperative to protect local manufacturing. This sentiment is trickling into other sectors, including green technology.
Draghi report, page 12.
European carmakers are not prepared to lead the energy transition. The EU’s historic ban on the sale of the internal combustion engine by 2035 demands that automakers achieve a 100% reduction in CO2 emissions. European car factories are lagging: under-utilised plans and minimal EV production. Nearly a third of market car plants of Europe’s top automakers were operating at half capacity or less last year.
And we haven’t even touched on the issue of economic decline. EU big wig, Mario Draghi, shook EU discourse, when in his recent report, he pointed out the obvious: European living standards are slipping compared to the United States, a gap driven largely by stagnant productivity growth across Europe.
The anxiety is palpable. And it’s reshaping the political landscape. Support for environmental policies, once a cornerstone of European governance, is waning. Green parties are losing ground, while populist and far-right parties are growing. The recent election in Brandenburg saw the Greens eradicated from 10 seats to 0.
Similar movements happened in the EU Parliamentary elections. Far-right parties, like Italy’s Brothers of Italy, Germany’s AfD, and Spain’s Vox are just a few examples of parties pushing back against the EV transition. They are arguing that it’s hurting ordinary workers. Even the more mainstream political coalitions like the European People’s Party (EPP) are divided on EVs. It is increasingly possible that the EU may even reject the historic green policies it recently adopted.
Europe’s green agenda is becoming a casualty of this growing economic concern.
The bottom line is this: when immediate economic worries—like jobs and local industry—clash with the abstract, long-term benefits of environmental policy, it’s no surprise which side wins. No one wants to see themselves or those around them become poorer. If Europe’s material living standards continue to stagnate, its commitment to the green ideal might just wither away.
And let’s not forget the broader implications. Imposing tariffs on Chinese EVs could prompt a retaliation from Beijing, risking a trade war. Already, China has been hinting at frying up Spain’s pork industry. Spanish Commissioner-designate Teresa Ribera recently warned that it’s important to “avoid a clash, a trade war” with China—yet that’s exactly where things seem to be heading.
These tariffs do not mean the end of green policy. Far from that, the tariffs attend to the EU’s green policies but in a way that at least serves the continent’s economic interests. Draghi’s report made the point that the push to decarbonisation was a “growth opportunity for EU industry.” China’s leading EV industry is also the result of state control. I can also counter with the fact that Tesla, that EV bastion, was not built on subsidies or protection.
Tariffs on Chinese EVs will make the energy transition more expensive in Europe. That should not be ignored. But underneath the EU’s actions is the consequence of growing economic anxiety. It’s a reminder that in the fight between green ideals and economic concerns, the latter will come out on top.
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