In response to the increased tariffs imposed by the European Union and the United States, Chinese electric vehicle (EV) manufacturers are exploring Africa as a potential market.
What Happened: The decision by the EU and U.S. to impose higher tariffs on Chinese EVs has led Chinese companies to seek alternative markets, South China Morning Post reported on Monday. Zhou Jiang, Vice President of Chinese EV maker Neta Auto, referred to the tariffs as “protectionist policies” and a “temporary setback.”
Zhou emphasized the significance of Neta Auto’s first African store in Kenya in the overseas expansion of Chinese EV brands. He mentioned that Africa, Southeast Asia, South America, and some European markets are all on the radar of Chinese EV brands.
On June 12, the European Commission announced additional tariffs of up to 38% on imported Chinese EVs from July 4, following the U.S.’s decision to quadruple duties for Chinese EVs from 25% to 100%. Both the EU and the U.S. accused China of distorting the market by providing subsidies to Chinese carmakers, leading to an influx of lower-cost EVs. China has dismissed these claims as “baseless hype.”
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In Nairobi, Neta Auto launched its Neta V star model car, retailing for around US$31,000 with a range of about 380km on a full charge. The company also signed a memorandum of understanding with Kenya-based Associated Vehicle Assemblers to assemble 250 EVs every month, making Kenya the hub for Neta EV exports to the rest of Africa.
Over the next two years, Neta Auto plans to enter 20 countries and open 100 stores in Africa, aiming to achieve an annual sales volume of more than 20,000 units within three years.
Why It Matters: The EU’s imposition of additional tariffs on Chinese EVs has been a significant factor in this shift. The tariffs were introduced due to concerns that cheaper EVs from China, which benefit from state subsidies, would push domestic players out of the market.
Despite the increased tariffs, Chinese EV manufacturers continue to expand globally. Companies like BYD Co., Ltd. BYDDF are investing in local factories, undeterred by the trade tensions. BYD is also planning to inaugurate its first Southeast Asia factory in Thailand to increase car sales, a move that coincides with the EU tariffs.
Chinese EV makers have been performing well, with NIO Inc. NIO delivering 21,209 vehicles in June 2024, a growth of 98.1% year over year. In the same month, XPeng XPEV delivered 10,688 vehicles which translates to a 24% year-over-year rise while Li Auto LI delivered 47,774 vehicles which is right behind its December record of 50,353 EVs. This shows that despite the challenges, Chinese EV manufacturers are finding ways to thrive and expand their global footprint.
Price Action: As per Benzinga Pro, during Monday’s pre-market, Nio was trading 1.52% lower at $4.560 after closing at $4.620 on Friday, Li was trading at $20.12, 1.66% lower than its previous close of $20.46 while XPeng was trading 3.91% lower at $7.610 after last week’s close at $7.920. Meanwhile, BYD closed at $60.10.
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Photos via Shutterstock
This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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