EU is expected to unveil tariff plans for Chinese EVs this week

The European Union is expected to reveal its tariff rate plan for Chinese electric vehicles this week, as the bloc cracks down on low-priced, subsidized imports.

The EU has a standard 10% duty on imported EVs, but is set to provisionally raise those fees for Chinese EVs starting July 4.

Citi analysts on Monday said the tariff rate could be “hiked to ~25-30% from 10% currently, while our risk scenario (40% probability) envisages a hike in the tariff rate to 30-50%.”

Anthony Sassine, senior investment strategist at KraneShares, on Tuesday said he expects the tariff rates to be “between 10% and 20%” but “could see this being on the higher end of the 20%” after the European Parliament elections last week.

Ursula von der Leyen, president of the European Commission, saw her party – the European People’s Party – gaining seats on Sunday. Von der Leyen has pushed for a “de-risking” approach from Beijing.

The European Commission first launched an investigation in October into subsidies given to EV makers in China. The EU alleged such subsidized imports “posed an economic threat to the EU’s EV industry.”

“But the Chinese manufacturers are so efficient, are so ahead of the curve, that tariffs like this – I don’t think will impact too much the pricing here. They will still be more competitive than their EU counterparts,” Sassine told CNBC’s “Squawk Box Asia” on Tuesday.

China’s EV industry has boomed thanks to incentives and support from the Chinese government, raising overcapacity concerns from authorities in the U.S. and Europe.

U.S. Energy Secretary Jennifer Granholm in March warned China could flood the U.S. electric-vehicle market with its offerings, after President Joe Biden raised similar concerns. The U.S. already announced stiff new tariffs in May. The Biden administration hiked tariffs on Chinese EV imports to 100%, up from 25%.

Turkey reportedly announced on June 8 that it will impose an additional 40% tariff on imports of vehicles from China.

Last month, Chinese EV makers including Xpeng and BYD showcased their models in Europe while Nio opened a new showroom in Amsterdam, despite the ongoing EU probe.

BYD announced in December that it will build a new factory in Hungary while Chery in April entered a joint venture with Spain’s Ebro-EV Motors to develop new EVs.

Cedomir Nestorovic, professor of geopolitics at ESSEC Business School, said “scores of Chinese manufacturers are now scouting the EU.”

They “will avoid, or they will try to avoid, all kinds of tariffs,” Nestorovic told CNBC’s “Street Signs Asia” on Monday.

“We’re seeing the Chinese automakers actually setting up factories in Europe. Nio, also, is looking at Hungary. So there are options here, and I’m sure there’s back channels happening here,” said KraneShares’ Sassine.

“I think with Europe, it’s not going to be a big deal. In the U.S., it’s a different story,” said Sassine.