News / With the US and EU putting up barriers, Chinese EVs could divert to SE Asia

© Suwin Puengsamrong

Automotive intelligence company Jato has identified a lucrative alternative market for Chinese electric vehicle (EV) exporters, as the US and EU continue to build protectionist measures against them.  

“While there are new EVs on the roads across South-east Asia, it is still very much an untapped market,” said Jato.  

The region has a combined GDP of $3.08trn and is estimated to become the fourth-largest economy in the world by 2050, according to Jato data, and new EV sales last year reached 134,000, a 199% growth on 2022, “driven by strong demand across Thailand, Vietnam, Indonesia and Malaysia”. 

Jato said: “Not only do Chinese OEMs have the vehicles and technology readily available to bring to the SE Asian market quickly, but their attractive price point will appeal to the more price-sensitive consumer.  

“In this market, consumers are not bound by brand loyalty, they favour product quality, performance and price, above all.” 

Meanwhile, a European Commission (EC) investigation has found EU battery and EV producers are economically threatened by competitors in China that “benefit from unfair subsidisation”. 

And last week it pre-disclosed its tariffs on EV imports from China. These provisional duties could be introduced as early as 4 July, “should discussions with Chinese authorities not lead to an effective solution”, with definitive measures imposed within the next four months. 

The tariffs vary according to EV manufacturer: BYD is expected pay 17.4%; Geely 20%; SAIC 38.1%; and others between 21% and 38.1%.  

Thomas Cullen, chief analyst at Transport Intelligence, told The Loadstar: “The automotive sector is changing fundamentally, and countries such as Germany see their economies disappearing under a wave of Chinese imports. 

“They [Germany] have been emblematic of economic strength for decades. However, for complex reasons, the Chinese have entered this [the EV] market particularly aggressively.” 

And, at a summit on Monday in Montreal, held by the International Chamber of Shipping (ICS) and Chamber of Marine Commerce, the negative impact of increasing protectionism was highlighted as one of the biggest emerging threats to global shipping. 

ICS chairman Emanuele Grimaldi said: “We are experiencing an unprecedented threat to free trade. The number of unilateral barriers to trade being imposed by countries is increasing exponentially. 

“I understand that the intentions of such barriers may be well meaning, but the reality is that trade is increasingly being weaponised as nations seek to obtain greater economic advantage or achieve political aims. 

“Shipping is responsible for transporting over $14trn worth of goods each year. And each trade barrier that is placed on shipping has a magnifying effect that will negatively impact global trade and ultimately reduce growth for all,” he added. 

An ICS-commissioned study found more than $2trn of global shipments were being affected by protectionist constraints, removing these could boost the global economy by more than three percentage points. 

“Europe and the US are proposing massive tariffs on EVs made in China, at a time when we are asking the world to move to electric cars. Some in the US are even considering a tariff on ships calling at US ports just because they [the ships] are built in China,” added Mr Grimaldi.  

The report also found that high-income countries could see an average increase of 4.5% in their goods exports if they were to loosen tariff and non-tariff restrictions on trade, while developing countries would see an increase of 7%.  

“The failure of global institutions like the World Trade Organisation further exacerbates this issue, as we need strong institutions to facilitate efficient and cost-effective trade between nations,” added Mr Grimaldi.