Connect with us


Automakers in Europe Prepare for China’s Reaction to EV Tariffs



The European automakers are uncertain about the timing and severity of the anticipated retaliation following the European Union’s imposition of temporary penalty tariff rises on Chinese electric vehicles.

With SAIC’s MG subject to a 37.6% duty on top of the current 10% tariff, the EU increased tariffs on Thursday to over 48%. Higher taxes of 19.9% and 17.4% were imposed on Geely and BYD. The average duty for other producers who assisted the EU probe is 20.8%, whilst the additional penalty for non-cooperators is 37.6%.

In November, the obligations become final, however talks may alter the outcome. Member states of the EU may elect to block the additional levies after it was determined that China’s subsidies for the EV industry hurt European automakers.

The EU seems to be playing with a weak hand, which is why some experts are perplexed by its decision to potentially start a tariff war with China. By 2035, the EU has mandated that its automakers sell entirely new electric vehicles (EVs). The quota will be gradually tightened, starting this year at little over 20% and rising to almost 80% by 2030.

The problem lies in the fact that EV sales in Europe have plateaued at roughly two million units this year, and most projections indicate that this number will only rise to seven or eight million units by 2030. Seven million falls very shy of the necessary 80%, at only about 50%. Therefore, slowing the rise of Chinese EV imports raises questions about the EU’s goals.

“The German auto industry has made a last-ditch desperate plea to the EU not to impose these tariffs. After all, the German auto industry exports three times as much as it imports from China by way of cars and four times as much by way of parts. The EU is now inviting the Chinese tit-for-tat response,” according to Sodhi.

The early, unofficial response from the Chinese government appeared to be rather light and was intended to increase duties on high-end gasoline-powered sedans and SUVs, primarily from Germany.

China hoped that the EU will see sense and refrain from starting a trade war. In an email discussion, Sodhi stated, “As with any tariff war, the Chinese will now be forced to react forcefully despite the move not being in their economic interest.”

German automakers, such as Mercedes and BMW, have all emphasized the benefits of free trade, and Germany has backed a diplomatic resolution with China.

China has made suggestions about expanding the scope of potential retaliation to include major European exports of pork, namely from Spain, the Netherlands, Denmark, and France, as well as high-value European goods including French wine, cognac, and agricultural products. Airbus Industrie is situated in Toulouse, France.

The CEO of The Electric Car Scheme, Thom Groot, anticipates a prompt answer from China.

In an email, Groot stated, “I would expect China will react quickly, first with strong words and perhaps later with actions, if behind-the-scenes discussions do not look like they will resolve the situation.”

According to Groot, the high cost of EVs in Europe has hindered demand, which has discouraged investment in production—a situation that the Chinese have exploited.

“What the U.K. and Europe need is stronger incentives to drive demand like (tax incentives) and equalizing taxes on public charging compared to charging at home, while simultaneously investing in the car manufacturing supply chain to catch up to the Chinese manufacturers which are currently ahead of the more established western manufacturers,” Groot stated.

Sales of China’s less expensive EVs would increase, according to GlobalData analyst Sammy Chan, even if the penalty tax policy is kept in place.

Chinese automakers have gained cost benefits by controlling vital components like batteries and integrating vertically. According to Chan, BYD has been selling its products in Europe for up to three times the price they do in China.

According to a recent statement from Rhodium Group, Chinese EVs will remain viable even with tariffs below 50% due to their production efficiency. According to investment bank UBS, that results in a 30% cost advantage for companies like BYD.

“Despite the tariffs, we do expect to see further Chinese brand growth in the Economy segment. Because European brands currently lack Chinese BEV-makers’ efficiencies and lower cost structure they are having to launch entry-level BEVs later to avoid losing money, giving Chinese BEVs in these segments a clearer run,” according to Chan.


Japan’s Inflation is Approaching US levels, Which is Difficult for Households



In Japan, where consumers are already struggling with low incomes and are frantically trying to stretch their hard-earned yen, consumer prices are growing quickly.

Consumer prices were up 2.8% year over year in June, nearly matching the 3.0% increase in US prices.

Since the beginning of 2023, Japan’s inflation has momentarily exceeded that of the United States twice. It’s almost time to do that once more.

Speaking on the inflation rate, Jun Saito, a senior research fellow at the Japan Center for Economic Research, stated, “Inflation is around 2% to 3%, which is very high by our standards.”

The rate at which prices are rising has surprised me.

Mizuho Securities predicted a year ago that by now, inflation would be less than 2%. And at the time, it was expecting inflation to be less than 1% by year’s end.

Japan has been battling deflation for decades, but its progress has been patchy and typically more dependent on external factors; the COVID-19 aftermath contributed to the country’s most recent high of 4.3% in January 2023, at least in part.

Presently, price increases in Japan are deviating from the pattern by staying stable at the same time that inflation decreases globally. In Japan, it has been rather stable, rising from a previous low of 2.2% in January and staying at 2.8% for two consecutive months. In the United States, it has been gradually declining in recent months.

The June inflation report reveals unusual price increases for numerous household-favorite goods. Rice has increased 12.3% year over year, along with cuttlefish (8.7%), Niboshi dried tiny sardines (34.6%), milk (8.9%), potatoes (28.5%), cabbage (276.6%), and tomatoes (15.6%).

This is largely offset by the costs of other well-known goods. For the year, tofu increased by just 2.4% and natto by by 1.3%. Mayonnaise declines by 0.4%.

As earnings stagnate, citizens are starting to worry about prices.

Japan has historically had low wages. For many years, Japan has had the lowest average yearly salary among the Group of Seven major industrialized nations. The OECD reports that Japan’s average annual wage is $42,118, while the average annual wage for all member states is $55,420. Regarding average wages, Japan was placed between Poland and Italy in that class in 2023.

It’s feasible because of its low costs.

Because of its low to negative inflation rate, Japan is among the least expensive developed nations. Despite the low pay, it has also been able to maintain a high standard of living.

Elevated inflation modifies the formula.

Since the beginning of 2022, real earnings have been declining, and as buying power declines, consumers are beginning to feel the pinch.

Analysts argue that the 5.1% increase reached in the annual winter\ spring offensive salary negotiations is not very significant in the grand scheme of things because employees of smaller companies receive much less than the headline figure.

Saito stated, referring to the consumer price index, “this helped, but still the average wage relative to the CPI inflation rate is negative.”

The Bank of Japan is forced to hike rates in order to control inflation, but it must exercise caution so as not to slow down the economy and therefore undermine wage growth.

The administration needs to move cautiously as well. The yearly minimum wage debate should suggest a raise that is sufficient to maintain household stability while preventing an excessive number of small businesses from going out of business.

If the American economy works together, Japan’s pricing issues might resolve themselves. Rates may drop and the currency may appreciate versus the yen if slowing indicators in the US economy persist, relieving pressure on the central bank and containing price increases.

According to Asian Development Bank principal economist John Beirne, “a narrowing of the interest rate differentials between Japan and the United States would support the yen and alleviate the extent of imported inflation.”

As the U.S. Federal Reserve begins to reduce rates, DBS senior foreign exchange strategist Philip Wee predicted in a recent paper that the value of the yen would reach 150 by year’s end and 139 by December 2025.

Continue Reading


Startup in Defense Technology Saronic Announces $175 Million in Series B Funding



The $175 million in series B funding that defense technology firm Saronic successfully raised, according to its leaders, will be crucial to the company’s ability to quickly scale up manufacturing of its three autonomous surface vessels.

According to a corporate release, venture capital firm Andreessen Horowitz led the investment round, with participation from other organizations including 8VC, Caffeinated Capital, Elad Gil, and NightDragon. Executives from Saronic told Breaking Defense in April that they had secured about $70 million so far, so this investment round has raised more than twice as much as the last one.

chief executive of Saronic, Dino Mavrookas, told reporters today, “What we’re doing now is really focusing on building the thousands.” “That manufacturing plant needs to be scaled.” The system is built by the system itself. It’s setting the stage for quick scale.

The Austin, Texas-based company is principally involved in the design and construction of autonomous surface vessels. It presently manufactures two models: the 6-foot Corsair and the 14-foot Cutlass, and it is working on a 24-foot version of the Spyglass. As Saronic puts it, the ASVs essentially meet the requirements that US Navy officials have stated are essential to constructing the future hybrid fleet: unmanned and autonomous ships with open systems architecture that can carry a wide variety of payloads depending on the mission.

Mavrookas’ emphasis on quickly scaling up production aligns with the objectives of Replicator, the Deputy Defense Secretary Kathleen Hicks project that mandates the Pentagon produce thousands of unmanned systems in less than two years to confront China. (When asked if it had discussed Replicator with the Defense Department, Saronic deferred to the Pentagon.)

In the same conference call, Saronic co-founder Rob Lehman told reporters that the company’s participation in Integrated Battle Problem 24.1, a major military exercise used by the Navy to evaluate unmanned systems, was a “coming out party for Saronic.”

“We went to San Diego and brought more boats than folks expected us to bring. And, frankly, we participated in more vignettes and parts of the exercise than were even planned,” the speaker admitted. “Post-Integrated Battle Problem, frankly, the demand signal has accelerated for the exercises, demonstrations, etc. throughout the rest of [2024] and [2025] as well.”

Continue Reading





Audi has unveiled the most recent iteration of its A5 model series, which represents a substantial advancement in the mid-size market. The A5 Avant, A5 Sedan, S5 Sedan, and the remarkable S5 Sedan are all members of the new family and all feature cutting-edge design and cutting-edge technology.

The A5 family’s flagship model is expected to be the S5 Avant. With the help of the latest MHEV plus technology, its powerful 3L V6 TFSI engine produces 367 horsepower. This mild-hybrid technology guarantees lower CO2 emissions and better fuel economy in addition to enhancing performance. A dramatic roofline and a smoothly integrated roof spoiler, which offer both visual appeal and aerodynamic efficiency, accentuate the athletic design of the S5 Avant.

The new models’ blend of sportiness and technical innovation was highlighted by Audi CEO Gernot Döllner, who said, “The new A5 shines with its sporty design, new interior, and modern electronic architecture. It also marks the launch of our new generation of efficient combustion engines.”

Built on Audi’s Premium Platform Combustion (PPC), the new A5 has a sleek, modern look across all four models. The Avant models combine a wide roofline with a roomy, practical rear, while the A5 and S5 sedans have a long wheelbase and a low, athletic body.

The new A5 models have an updated interior that emphasizes user engagement. The Audi MMI panoramic display, which consists of a 14.5-inch touch screen and an 11.9-inch virtual cockpit, dominates the digital stage. A 10.9-inch front passenger display and a head-up display that may be customized are examples of optional equipment.

Orders for the new Audi A5 family will mainly be accepted in Germany, with a wider market launch scheduled for November. The starting entry price for the new model range is planned to be €45,200 EUR, or around $50,000 USD.

Continue Reading


error: Content is protected !!