Chinese electric car stocks NIO, LI and XPEV on alert ahead of EU tariffs

The European Union (EU) is pushing ahead with its tariffs on Chinese electric vehicles (EVs). In fact, since Friday, July 5, the EU has imposed a tariff of up to 37.6% on electric vehicles imported from China.

As Reuters This new policy also reportedly includes a “four-month window during which tariffs are provisional and intensive discussions between the two sides are expected.” Nevertheless, news of this development has sent Chinese EV stocks into the red this morning as the sector braces for geopolitical tensions. For investors, this presents a complicated industry forecast for the global EV market.

What’s happening with Chinese EV stocks?

Trading in Chinese EV stocks got off to a bumpy start today. Both Nio (NYSE:NIO) And Li Car (NASDAQ:LI) have currently fallen by more than 1%. Meanwhile, the situation is looking XPeng (NYSE:XPEV), which has fallen by over 5%. Even industry leaders BYD (OTCQB:BYDD) is in the red as news tends to its global expansion initiatives.

Auto industry associations in China have made it clear that they are dissatisfied with the EU’s decision. Reutersthe Chinese Association of Automobile Manufacturers (CAAM) is reportedly “extremely dissatisfied” with the new policy.

This makes sense considering how many Chinese electric vehicle manufacturers will be affected by this development. The Associated Press The following breakdown is provided for the different companies affected:

“The tariffs, if applied, would be 17.4% on BYD cars, 19.9% ​​on Geely’s and 37.6% on vehicles exported by Chinese state-owned SAIC. Geely owns brands such as Sweden’s Polestar and Volvo, while SAIC owns Britain’s MG, one of Europe’s best-selling electric car brands. Other electric car manufacturers in China, including Western companies such as Volkswagen, BMW and Tesla, would be subject to tariffs of at least 20.8%. The Commission mentioned that Tesla could face an ‘individually calculated’ tariff rate if the tariffs were finally imposed.”

Why it is important

This is not the only international tariff that has threatened Chinese EV stocks recently. InvestorPlace’s As Eddie Pan reports, the threat of Canadian tariffs also rocked Chinese electric car makers’ stocks last month. Meanwhile, U.S. tariffs are set to take effect in August. And if former President Donald Trump is re-elected, he’ll likely raise the tariffs even further.

Overall, Chinese electric car stocks face a highly uncertain future. With tariffs coming into force from the EU and even more tariffs from the US, it will be difficult for Chinese electric car companies to remain competitive on a global scale.

At the time of publication, Samuel O’Brient had no position (either directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s disclosure policies.

At the time of publication, Samuel O’Brient held a long position in Polestar (PSNY). The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s publishing policies..

At the time of publication, the editor in charge did not hold any positions (either directly or indirectly) in the securities mentioned in this article.