The oversupply situation in domestic production and fierce price competition have prompted Chinese car manufacturers to boost exports (Illustrative image: VCG).
With the European Union (EU) deciding to impose an additional variable tax of up to 38% on electric cars imported from China, a new survey has revealed that 2 out of the 5 best-selling electric car models in Europe are produced in China; those are the Tesla Model Y and Tesla Model 3.
Looking at the data for May, it can be seen that Chinese cars accounted for 19% of electric car sales in Europe, increasing by 6 percentage points compared to the same period last year.
Chart showing the origin of new electric car registrations in Europe in May 2024 (dark color) compared to May 2023 (Source: JATO Dynamics).
In May, new car sales in Europe reached nearly 1.09 million units, a decrease of 2.5% compared to last year, but still higher than the same period in 2021 and 2022 (post-Covid-19 pandemic), when sales reached 943,405 units and 1,082,934 units, respectively.
Felipe Munoz, a global analyst at JATO Dynamics, commented: "The European car market has only recovered about 75%-80% compared to pre-pandemic levels. Therefore, many factories across Europe are not operating at full capacity, giving Chinese car manufacturers the opportunity to sell cars across Europe."
This decline is partly explained by the drop in pure electric vehicle (BEV) and plug-in hybrid electric vehicle (PHEV) sales from 250,530 units in May 2023 to 226,665 units in May 2024. In particular, pure electric vehicle sales saw the largest decrease compared to the same period last year, down 11% to 151,237 units, while plug-in hybrid electric vehicle sales decreased by 7%.
According to Munoz, this decline is due to the high prices of electric and plug-in hybrid vehicles, exceeding the affordability of the majority.
Top 10 best-selling plug-in hybrid electric vehicles (PHEV) and pure electric vehicles (BEV) in Europe in May (Source: JATO Dynamics).
From now on, electric cars imported from China will be subject to an additional tax of up to 38%, depending on the brand. MG, a brand under the Shanghai Automotive Industry Corporation (SAIC), will face a maximum tax rate of 38.1% when this regulation officially takes effect. The new tax rates will also affect BYD, Tesla, and many other brands.
It is worth noting that currently MG is generally more successful than Tesla in Europe. The company focuses on internal combustion engine cars, possibly anticipating being taxed. MG's pure electric car sales in Europe declined in May, while Volvo, BYD, and Smart saw strong sales increases.
Volkswagen dominates the rankings of the best-selling car models and brands in Europe in May.
List of the top 25 best-selling car models in Europe in May (Source: JATO Dynamics).
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