Does Climate Change Matter Anymore? EU’s China Fear a Reverse Gear Regarding EVs

by Admin (Posted on September 2, 2024)

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By Moshi

In recent months a battle over the electric vehicle market has been raging between the EU and China. The former asserts that Chinese auto companies in the Electric Vehicles sector are heavily subsidized by the government which has given them an edge over their European counterparts. Moreover, the EU is weary of the cheap EVs being sold by Chinese manufactures within the EU market, effectively outcompeting domestic producers and putting a strain on the EU EV industry. The push for punitive measures against Beijing is largely being led by France and Spain.

On the other hand, Germany has been reluctant and cautioned its fellow EU members to trade carefully around the issue of imposing tariffs as high as 38% on Chinese EV makers. Berlin is well aware of the counter effects this could have on its own auto manufactures were Beijing to retaliate in kind. Germany autos such as Mercedes and BMW enjoy a significant market share in China and would not wish to upset this highly profitable arrangement. Luckily, for Berlin, Beijing has not yet committed to responding in kind and has only threatened to retaliate by imposing tariffs on EU pork and Wine exports, a move that has French Cognac producers worried according to a report by Reuters.

Calculations based on the Kiel institute’s Kite Model indicate significant changes resulting from EU total tariffs on China’s EVs which could lead to a reduction of imports of EVs from china to around 25 percent (a value of about $4billion).

With the current political climate and global political realities, it is only logical to deduce that the EV battle is tied into the overall trend of worsening ties between the collective west and Beijing. Spearheaded by Washington, the west has been on a steady trend of the so-called de-risking of their relations with China. The once outspoken champions of globalization are quietly and nervously retreating back into the familiar shell of protectionism when faced with actual competition. It is not China’s fault that their technology is well advanced and that they are able to produce highly sought after-planet saving goods cheaply.

Even more importantly, this trade war on Electric Vehicles has lasting negative impacts on climate transition. Tariffs on cheap Chinese EVs will only make the cars less affordable. EU manufactures make EVs at a high cost of production and this cost is transferred onto the consumer and this is what has made the average EU citizen to purchase cheaper EVs from china, if this choice is taken away, then it automatically leads to a situation where less people use EVs.

Germany has tried to point this issue out in vain. The country had set a goal of having 5o million EVs on the road by 2030, clearly with this trend this may not be achievable. It comes off as hypocritical to pressure and persuade the rest of the world to transition to greener economies while the west backtracks on these commitments because domestic politics are inconvenienced by the idea of saving the entire planet. It is even more absurd due to the fact that Global south countries were largely dismissed when they tried to make similar claims about the hasty transition to green economies. They were constantly told the planet is at risk and the transition is a noble cause. Shouldn’t the EU also take one for the team and look beyond domestic politics and aim for the greater good? Is there any wonder that the so-called rules based order is increasingly being challenged?

The answers I must say, depend on who makes the rules. The rules based order determined that globalization was a good thing and now that it threatens their pockets, the rules have changed and only certain kinds of globalization are acceptable with those that are not western driven cast on the bad side of the globalization spectrum.

The politics in the west can be quite discombobulating, especially for those in the Global South. The rules keep changing and it is always in favor of the rule makers. The trade war brewing around EVs is just a symptom of a much worse growing disease.

We are living in a time where simple media narratives and rhetorical tricks no longer fool the masses and the growing number of literate young people all around the world now more than ever recognize trickery, deceit and hypocrisy when they see it. The EV question only has one answer, if they are good for the planet, then they should be affordable for all, either we live in a global village with common, fair and just rules or we live in a jungle of might makes right.

The writer is a senior research fellow with the Development Watch Center.