Brussels rejected a proposal by the Chinese government for imported electric vehicles made in China to be sold at a minimum price of €30,000 (about R578,459), three sources said, a move Beijing hoped would avert EU tariffs being imposed next month.
The European Commission said it had dismissed minimum price offers from EV makers in China a month ago as part of an anti-subsidy investigation that has thrown Beijing and the EU into their biggest trade dispute in a decade.
Specific details of the compromises being offered in negotiations between the two have not previously been reported.
The three sources familiar with the matter declined to be identified because the details are confidential.
China's commerce ministry and the commission did not immediately respond to requests for comment. The commission has previously declined to comment on negotiations.
Electric cars cost on average less than half as much in China as they do in Europe and the US, according to 2023 figures from data firm Jato Dynamics.
The country's carmakers benefit from a range of cost advantages, from local access to raw materials and batteries and heavy subsidies from Beijing.
The average retail price of a battery-electric car in China was around €32,000 (about R617,023) in the first half of 2023, including models such as BYD's Seagull that sell for under €10,000 (about R192,819).
By contrast, the average retail price of a battery electric car in Europe was €66,000 (about R1,273,299), according to Jato's data. Most cheaper models under development, at around €20,000 (about R385,848), are not due to hit the market until 2025 at the earliest, with Volkswagen targeting a €20,000vehicle in 2027.
In rejecting the Chinese proposal, Brussels said at the time it was not only about the prices carmakers charge for their China-made EVs, but also the subsidies they received producing them and removing the impact of such support payments.
The commission had declined to provide details of the offers, by which makers of EVs in China pledged to respect pricing thresholds to avoid flooding the European market with cheap vehicles the bloc said local rivals cannot compete with.
Chinese carmakers such as SAIC and BYD are pricing their EV models just above €30,000 in Europe even though they sell them at a fraction of the price in their home market, highlighting their flexibility but also the appeal for them in selling in Europe.
BYD's Seagull, a smaller EV scheduled to come to Europe next year, is expected to be priced just under €20,000.
Time for a real deal running out
The time to fend off tariffs through a negotiated deal is limited, with the commission last week saying tariffs of up to 45% on EVs built in China would be imposed from October 31 for five years unless both sides agree on a plan B.
On Tuesday, China imposed temporary anti-dumping measures on imports of brandy from the EU, hitting French brands including Hennessy and Remy Martin, days after the 27-state bloc voted for the EV tariffs.
China’s commerce ministry has previously said it was looking to negotiate an alternative to tariffs that would involve some form of “flexible pricing commitment”. It did not provide details.
The commission has said it is prepared to reconsider other price undertakings, involving minimum prices and import quotas, as negotiations continue.
A solution could be an individually calculated minimum price for each carmaker and possibly per model type, depending on the size of car and its range, the sources said.
One of the sources said minimum price levels of €35,000 (about R675,019) to €40,000 (about R771,870) would serve as a better yardstick for talks.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.