by: Jessica Ferreira

Chinese automakers will keep investing in European factories, despite the European Union’s (EU) announcement of a potential increase in import tariffs on Chinese electric cars (EV), according to financial ratings agency Fitch.

According to a new report by Fitch, the tariffs imposed by the European Commission on imported Chinese EV should not affect the competitive landscape in Europe in the short term, given the slowdown in the uptake of electric vehicles.

Although car companies such as SAIC and BYD are likely to be subject to additional tariffs of 38.1% and 17.4% respectively, the report indicates that the market share of China’s local EV brands in Europe will not fall below 5% for the next few years.

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At the same time, due to the strong balance sheets of European car manufacturers with net cash positions, any short-term pressures should be absorbed without ratings being affected.

In anticipation of potential tariffs, Chinese brands have been increasing investments in Europe and around the world in order to diversify production and keep sales more profitable.

Fitch also made suggestions for Chinese EV manufacturers to circumvent the new EU tariffs, such as strengthening partnerships, a trend that is expected to increase.

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The European Commission has announced an increase in import tariffs on Chinese electric vehicles to “remedy the effects of the unfair trade practices detected”.