After the European Union imposed high tariffs on electric vehicles imported from China, the shares of BYD ripped higher. Also moving higher were shares of Geely and Nio. BYD, Geely, and Nio are Chinese car brands that were specifically targeted by the EU tariffs, along with SAIC, a mostly state-owned enterprise.

European automakers with manufacturing operations in China opposed these tariffs from the very beginning. This is because structure of the tariffs means that it will be, ironically, European automakers with Chinese factories that will suffer the most. The manufacturing costs of these joint venture (JV) companies are much lower than in comparable European factories, yet are still substantially higher than for Chinese brands that are not JV's.

BYD will enjoy strong pricing power even after the tariffs for their Chinese all-electric cars, and for their plug-in hybrid models and vehicles built in East European factories, they won't face tariffs at all. Geely and Nio are also better off than their European competitors in the EV space, but their higher tariffs rates will squeeze profit margins.

Resources and links:

Bloomberg, EU Tariffs on China EVs to Reach as High as 48% With New Levies
https://www.bloomberg.com/news/articl...

CNBC, Chinese EV stocks surge after EU slaps up to 38% additional import tariffs
https://www.cnbc.com/2024/06/13/chine...

Europe’s electric car tariffs sting China but won’t halt BYD’s advance
https://www.cnn.com/2024/06/13/cars/e...

Wall Street Journal, The EV Tariff Wars Get Crazier; Europe taxes vehicles from China that its own companies make.
https://www.wsj.com/articles/electric...