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Volvo AB drives prosperity through transport and infrastructure solutions, offering trucks, buses, construction equipment, power solutions for marine and industrial applications, financing, and services that increase the customers' uptime and productivity. Its segments are Trucks, Construction Equipment, Buses, Volvo Penta, and Group Functions & Other.

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The European Union is set to <a href="https://www.france24.com/en/live-news/20240930-eu-states-plan-friday-vote-on-chinese-ev-tariffs">vote on Friday</a> on whether to back final tariffs on China's electric vehicle (EV) makers.&nbsp;



The EU <a href="https://europeancapitalinsights.substack.com/p/european-tariffs-on-chinas-ev-makers?r=3nmatg">wants to protect its automobile makers</a> against the increasing number of less expensive Chinese EVs entering the market. Of the total <a href="https://think.ing.com/articles/what-the-eus-tariffs-on-chinese-electric-vehicles-could-mean-for-energy-transition/">EV imports to the EU in 2023</a>, 54%&nbsp;originate from China.



But the 27-member bloc's protectionist stance could cause a wider trade war with China. That could hurt the EU's export-dependent companies, its EV targets and threaten critical raw material supplies.&nbsp;



The European Commission (EC)<a href="https://www.nytimes.com/2024/07/04/business/european-union-china-ev-tariffs.html"> imposed provisional tariffs on China's EVs</a> in July <a href="https://asia.nikkei.com/Economy/Trade/China-Europe-in-EV-tariff-stare-down-as-Beijing-drops-retaliation-hints">despite Beijing's previous warning</a> that it would retaliate.



Beijing has denied that it improperly subsidizes EV companies, arguing that its leading role in EVs results from efficient manufacturing.



<figure class="wp-block-image size-full is-resized"><img loading="lazy" decoding="async" width="805" height="448" src="https://contributor-assets.benzinga.com/wp-content/uploads/2024/10/02142904/ING_chart.png" alt="" class="wp-image-1771" style="width:624px" srcset="https://contributor-assets.benzinga.com/wp-content/uploads/2024/10/02142904/ING_chart.png 805w,https://contributor-assets.benzinga.com/wp-content/uploads/2024/10/02142904/ING_chart-300x167.png 300w,https://contributor-assets.benzinga.com/wp-content/uploads/2024/10/02142904/ING_chart-768x427.png 768w" sizes="(max-width: 805px) 100vw, 805px" /></figure>



<a href="https://think.ing.com/articles/what-the-eus-tariffs-on-chinese-electric-vehicles-could-mean-for-energy-transition/">Source</a>: JATO Dynamics, BNEF, ING Research



<h3 class="wp-block-heading">Europe-China EV Talks Stall</h3>



So far, both sides have been unable to compromise on their EV trade differences.&nbsp;



The EU's Commissioner for Trade, Valdis Dombrovskis, and China's Minister of Commerce, Wang Wentao, <a href="https://policy.trade.ec.europa.eu/news/readout-meeting-between-evp-dombrovskis-and-chinese-commerce-minister-wang-2024-09-20_en">held unsuccessful talks</a> on September 19.&nbsp;



"Both sides <a href="https://x.com/VDombrovskis/status/1836795726308708712">agreed to intensify efforts</a> to find an effective, enforceable and WTO compatible solution," Dombrovskis said.&nbsp;



The EC then told EU member countries t<a href="https://www.reuters.com/business/autos-transportation/eu-continue-china-electric-vehicle-talks-even-after-final-vote-say-sources-2024-09-30/#:~:text=BRUSSELS%2C%20Sept%2030%20(Reuters),EU%20official%20said%20on%20Monday.">hat it would continue negotiations with China</a> after the October vote, Reuters reported.&nbsp;



 EU members are split on whether to levy European tariffs for the next five years, adding a further complication. Spain has called on th<a href="https://www.france24.com/en/live-news/20240911-spain-pm-urges-eu-to-reconsider-china-ev-tariffs-plan">e EU to &#8220;rethink&#8221; the duties, aligning</a> with Germany, while France supports them.&nbsp;



<h3 class="wp-block-heading">Automakers Warn Against European Tariffs</h3>



Automobile industry leaders in Europe have pushed back against the tariffs.&nbsp;



Executives from BMW AG (OTC:<a class="ticker" href="https://www.benzinga.com/stock/BMWYY#OTC">BMWYY</a>) and Volkswagen AG (OTC:<a class="ticker" href="https://www.benzinga.com/stock/VWAGY#OTC">VWAGY</a>) have warned that imposing tariffs on Chinese EVs was a bad idea.



&#8220;Protectionism risks starting a spiral," <a href="https://europe.autonews.com/automakers/german-automakers-slam-eus-high-tariffs-chinese-ev-exports">BMW CEO Oliver Zipse said</a> in June. "Tariffs lead to new tariffs, to isolation rather than cooperation."&nbsp;



<a href="http://www.bmw-brilliance.cn/cn/en/news/news/2024-1-09.html#:~:text=Munich%2FBeijing.,mainland%20market%20(%2B4.2%25).">China is a core sales market for BMW</a>. It delivered 824,932 BMW and MINI vehicles in the Chinese mainland market in 2023.



<a href="https://europeancapitalinsights.substack.com/p/volkswagen-considers-first-ever-closure?r=3nmatg">Former Volkswagen AG CEO</a> Herbert Diess reiterated a similar message. "An <a href="https://x.com/economics/status/1799352437800612022">escalating trade spat</a> between China and the West would fuel inflation," he said in June.&nbsp;



Would European tariffs actually slow China's EV expansion into the region? The Rhodium Group, a New York-based independent research provider, doubts their impact.&nbsp;



<figure class="wp-block-image size-full is-resized"><img loading="lazy" decoding="async" width="855" height="431" src="https://contributor-assets.benzinga.com/wp-content/uploads/2024/10/02142956/ing2.png" alt="" class="wp-image-1772" style="width:624px" srcset="https://contributor-assets.benzinga.com/wp-content/uploads/2024/10/02142956/ing2.png 855w,https://contributor-assets.benzinga.com/wp-content/uploads/2024/10/02142956/ing2-300x151.png 300w,https://contributor-assets.benzinga.com/wp-content/uploads/2024/10/02142956/ing2-768x387.png 768w" sizes="(max-width: 855px) 100vw, 855px" /></figure>







<a href="https://think.ing.com/articles/what-the-eus-tariffs-on-chinese-electric-vehicles-could-mean-for-energy-transition/">Source</a>: ITC Trade Map, BNEF, ING Research



"<a href="https://rhg.com/research/aint-no-duty-high-enough/">Duties in the 40-50% range</a> would probably be necessary to make the European market unattractive for Chinese EV exporters," it said in April.



<h3 class="wp-block-heading">Provisional European Tariffs On China</h3>



The EC launched its <a href="https://ec.europa.eu/commission/presscorner/detail/en/ip_24_3231">anti-subsidy investigation against Chinese EVs</a> last year.



The investigation concluded that China's value chain of battery electric vehicles (BEV) benefited from unfair subsidization. This caused a "threat of economic injury to EU BEV producers," the EC said.



The <a href="https://www.bloomberg.com/news/articles/2024-08-21/saic-motor-blames-impending-eu-duties-for-slumping-sales">highest tariffs were imposed</a> on Chinese state-owned automobile manufacturer SAIC Motor (Shanghai:<a href="https://finance.yahoo.com/quote/600104.SS/">600104.SS</a>) at 36.3%. BYD (OTC:<a class="ticker" href="https://www.benzinga.com/stock/BYDDY#OTC">BYDDY</a>) and Volvo's (OTC:<a class="ticker" href="https://www.benzinga.com/stock/VOLAF#OTC">VOLAF</a>) parent, Geely (OTC:<a class="ticker" href="https://www.benzinga.com/stock/GELYF#OTC">GELYF</a>), received lower tariffs of 17.4% and 19.9%.



The EC then cut<a href="https://ec.europa.eu/commission/presscorner/detail/en/qanda_24_4302"> European tariffs marginally</a> at the end of August. It considered submissions and technical corrections by EV companies operating in China.



<h3 class="wp-block-heading">European Tariff Trade Spat With China</h3>



In response to the threat of tariffs, China has accused the EU of violating World Trade Organization (WTO) rules.&nbsp;



"Judgment in the EU's provisional conclusion lacks factual and legal foundation," a Chinese ministry spokesperson said on August 9.&nbsp; "It severely<a href="https://www.bloomberg.com/news/articles/2024-08-09/china-takes-europe-s-ev-tariffs-to-wto-as-trade-tensions-rise?utm_medium=cpc_search&amp;utm_campaign=NB_ENG_DSAXX_DSAXXXXXXXXXX_EVG_XXXX_XXX_COUSA_EN_EN_X_BLOM_GO_SE_XXX_XXXXXXXXXX&amp;gad_source=1&amp;gclid=Cj0KCQjwo8S3BhDeARIsAFRmkOMKaKYs36uGBlOIi64HxfnrIRqjbZv_QwFuVa65JaDuGzVZtWJDcKYaAmA4EALw_wcB&amp;gclsrc=aw.ds"> violated WTO rules</a>."



It then brought the case to the <a href="https://www.wto.org/english/news_e/news24_e/ds626rfc_14aug24_e.htm#:~:text=WTO%20%7C%202024%20News%20items%20%2D%20China,subsidy%20duties%20on%20electric%20vehicles">WTO's rules dispute settlement mechanism</a> on August 14 to "safeguard the development rights and interests" of the EV industry.



A week later, China initiated an anti-subsidy investigation targeting EU milk, cream, and cheese products.



The <a href="https://ec.europa.eu/commission/presscorner/detail/en/ip_24_4821">EC challenged China</a> in September at the WTO against China&#8217;s investigation into EU dairy products. <a href="https://x.com/VDombrovskis">China's investigation</a> "is based on questionable allegations and insufficient evidence," Valdis said on <a href="https://x.com/VDombrovskis">X</a>.&nbsp;&nbsp;



<h3 class="wp-block-heading">Europe Depends On China For Raw Materials</h3>



But a trade war with China would likely hurt European companies and the broader economy.



China imports 22% of its <a href="https://www.reuters.com/breakingviews/eus-china-trade-weak-spots-hide-plain-sight-2024-07-09/#:~:text=Methodological%20complexities%20and%20statistical%20revisions,the%20world's%20second%2Dlargest%20economy">consumer goods from Europe</a>. This puts <a href="https://europeancapitalinsights.substack.com/p/european-luxury-brands-feel-pinch?r=3nmatg">luxury groups</a> like LVMH (OTC:<a class="ticker" href="https://www.benzinga.com/stock/LVMHA#OTC">LVMHA</a>) and Kering (OTC:<a class="ticker" href="https://www.benzinga.com/stock/PPRUY#OTC">PPRUY</a>) at risk.



European tariffs could increase the cost of EVs for consumers as Europe moves to phase out n<a href="https://think.ing.com/articles/what-the-eus-tariffs-on-chinese-electric-vehicles-could-mean-for-energy-transition/">ew gasoline and diesel cars by 2035</a>, according to ING.



The bloc remains highly <a href="https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal/green-deal-industrial-plan/european-critical-raw-materials-act_en#:~:text=The%20EU%20is%20heavily%20dependent%20on%20imports%20of,is%20extracted%20in%20the%20Democratic%20Republic%20of%20Congo">dependent on China</a> for critical raw materials. It sources 97% of its magnesium and 100% of its rare earths for permanent magnets from China.



<figure class="wp-block-image size-full is-resized"><img loading="lazy" decoding="async" width="830" height="418" src="https://contributor-assets.benzinga.com/wp-content/uploads/2024/10/02143051/ing3.png" alt="" class="wp-image-1774" style="width:624px" srcset="https://contributor-assets.benzinga.com/wp-content/uploads/2024/10/02143051/ing3.png 830w,https://contributor-assets.benzinga.com/wp-content/uploads/2024/10/02143051/ing3-300x151.png 300w,https://contributor-assets.benzinga.com/wp-content/uploads/2024/10/02143051/ing3-768x387.png 768w" sizes="(max-width: 830px) 100vw, 830px" /></figure>



"Europe will not be self-sufficient in EV production or the EV supply chain any time soon," ING wrote on June 19. "It needs to act carefully, considering any further retaliation from China."



Disclaimer:



Any opinions expressed in this article are not to be considered investment advice and are solely those of the authors. European Capital Insights is not responsible for any financial decisions made based on the contents of this article. Readers may use this article for information and educational purposes only.



This article is from an unpaid external contributor. It does not represent Benzinga&#8217;s reporting and has not been edited for content or accuracy.

European Tariffs On China's EV Makers Could Backfire

<ul>
	<li>Volvo Group and Daimler Truck share the ambition to lead transformation to software-defined heavy-duty commercial vehicles to enhance customer efficiency and experience.</li>
	<li>Both companies intend to create a joint venture to become the leading developer of a software-defined heavy-duty vehicle platform, including software and hardware, providing the basis for differentiating digital vehicle features.</li>
	<li>The new company is intended to be a 50/50 joint venture to be headquartered in&nbsp;Gothenburg, Sweden.</li>
</ul>

Volvo Group And Daimler Truck Intend To Form Joint Venture For Innovative Software-Defined Vehicle Platform

<ul>
	<li>Volvo AB&rsquo;s&nbsp;(OTC:&nbsp;<a class="editor-rtfLink" href="https://www.benzinga.com/stock/volvf#OTC" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">VOLVF</a>) Volvo Autonomous Solutions&nbsp;<a class="editor-rtfLink" href="https://www.benzinga.com/pressreleases/21/03/n20400847/volvo-partners-with-aurora-to-accelerate-the-deployment-of-autonomous-transport-solutions" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">forged a multi-year</a>&nbsp;partnership with autonomous driving company&nbsp;Aurora&nbsp;to develop on-highway autonomous trucks.</li>
	<li>The collaboration will initially focus on hub-to-hub applications for North American customers.</li>
	<li>This partnership will concentrate on the amalgamation of the Aurora Driver into Volvo&rsquo;s on-highway trucks and the development of Transport as a Service solution.</li>
	<li>Volvo also&nbsp;<a class="editor-rtfLink" href="https://www.benzinga.com/news/19/06/13938611/nvidia-to-partner-with-volvo-on-self-driving-trucks?utm_source=feedburner&amp;utm_medium=feed&amp;utm_campaign=Feed%3A+benzinga%2Fgeneral+%28Channels+-+General%29" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">forged a partnership</a>&nbsp;with&nbsp;NVIDIA Corp&nbsp;(NASDAQ:&nbsp;<a class="editor-rtfLink" href="https://www.benzinga.com/stock/nvda#NASDAQ" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">NVDA</a>) to develop artificial intelligence (AI) for self-driving trucks.</li>
	<li>Aurora&rsquo;s autonomous systems, unified self-driving stack, software, hardware, and data services platform will lead to efficient and safe on-highway solutions in the medium term and accelerate Volvo&rsquo;s hub-to-hub applications offer in North America as per Volvo Autonomous Solutions President Nils Jaeger.</li>
	<li>Price action:&nbsp;VOLVF shares traded lower by 1.38% at $25.43 on the last check Tuesday.</li>
</ul>

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