Tariffs and Competitiveness: The Impact of the EU Protectionist Measures on the Electric Vehicle Industry

Ilaria Fusacchia, Luca Salvatici () and Alessandro Antimiani

L'industria, 2024, issue 3, 349-371

Abstract: In recent years, the electric vehicle sector has emerged as a key arena of global economic competition, driven by the transition to sustainable mobility and increasingly stringent emissions regulations. The European Union’s (EU) introduction of compensative duties on imports of battery electric vehicles (BEV) from China, primarily justified by the need to rebalance market conditions distorted by Chinese state subsidies, represents a cornerstone of the EU’s industrial strategy. This study examines the effects of these measures on three central aspects: external dependency, European competitiveness, and impact on consumers, with a focus on the heterogeneous effects across different Member States (MS). Using a hybrid equilibrium model, the results show a reduction in Chinese imports, partially offset by an increased presence of other trading partners (such as the United Kingdom and South Korea) and an increase in intra-EU trade. However, this growth depends on the production capacity of individual countries, exacerbating disparities between MS with stronger automotive industries and those with less competitive sectors. The restrictions could also heighten challenges for European exporters, who face growing competition in global markets where Chinese manufacturers of BEV gain market share. Finally, we observe an increase in import prices, with a pass-through effect on domestic prices, which could reduce the economic accessibility of electric mobility for a significant portion of consumers.

Keywords: Electric Vehicles; Industrial Competitiveness; Foreign Dependency; Subsidies; Duties. (search for similar items in EconPapers)
Date: 2024
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