Europe might announce new tariffs on Chinese-made electric cars as soon as next week, as the European Commission wraps up its monthslong probe into whether Beijing gives the industry an unfair level of support.
Chinese EV manufacturers are, unsurprisingly, perturbed by the claim. Nio CEO William Li, during the company’s earnings call, was the latest to question the investigation.
Tariffs on new energy vehicles, a category that includes battery EVs and plug-in hybrids, goes against the “sustainable development of all humankind,” Li said.
The EV CEO said that Nio would adjust its strategy depending on the tariffs and that European sales were still “quite moderate” compared with the company’s total sales.
Other Chinese EV makers are also pivoting away from Europe. Last week, Great Wall Motor announced that it will close its European headquarters and lay off Europe-based staff.
A possible flood of cheap EVs from China is spurring a protectionist backlash in Europe and the U.S., which announced a 100% tariff on Chinese EVs in mid-May. Western officials argue that Beijing is supporting industries like EVs to cover domestic economic issues, and then dumping subsidized products overseas.
Beijing officials have previously criticized Europe’s probe as unfair, in violation of global trading rules, and exclusively targeted at China. Chinese car manufacturers, for their part, argue their cheap cars are the result of “management efficiency” and not state support.
Nio’s loss widens
While Chinese EV makers are finding some success in overseas markets, Nio still makes most of its money from China, increasingly a challenging market thanks to an economic slowdown and intense competition.
Nio reported a 3.2% year-on-year drop in deliveries for the most recent quarter. The company’s adjusted net loss widened to 4.9 billion yuan ($677 million), compared with 4.1 billion for the same period a year ago. Nio has yet to turn a profit.
The company’s shares dropped 7% in Friday trading in Hong Kong.
Nio has positioned itself as a premium brand since its launch in 2014. The company places an emphasis on R&D and user experience, and offers a battery swapping and leasing model in China.
Conditions in the Chinese EV market are challenging. EV companies are continuing their aggressive price wars this year as EV sales growth slows down. New entrants with deep pockets, like tech company Xiaomi, are also trying to break into the industry.
Nio launched a mass-market brand Onvo in mid-May, with first deliveries planned for September. The company predicts it will deliver between 54,000 and 56,000 units for the current quarter, which would be an increase of as much as 138% year on year.
As of now, Nio has delivered 36,164 vehicles in the first two months of Q2 2024.
