Chinese electric vehicles will remain competitive in Europe despite the EU’s additional tariffs on autos made in the country, particularly after they were revised lower last month.

In the latest tariff revisions at end August, BYD, China’s behemoth automaker, saw tariffs cut to 17% from 17.4%, Geely to 19.3% from 19.9%, and SAIC saw a reduction to 36.3% from 37.6%.

To make the European market unattractive for Chinese EV exporters, tariffs have to be as high as 50%, according to research group Rhodium. It said that number might need to be even higher for vertically integrated manufacturers such as BYD.

The current tariffs will not be a significant deterrent to China’s EV-makers, said Joseph McCabe, president and CEO of global auto research company AutoForecast Solutions. “Tariffs on Chinese-made EVs will create a hurdle, but not a barrier to entry,” he added.

He pointed out that the EU’s tariffs were not as severe as those announced by North America because European and Chinese original equipment manufacturers are heavily interconnected. The U.S. announced a 100% tariff on Chinese EVs in May this year. Canada followed suit last month.

“It is a delicate balance to promote domestic European production without severely impacting their Chinese operations,” McCabe said.

Chinese EV makers are coming up with newer, cheaper offerings even as the EU strives to curtail imports via tariffs.

At a conference in May this year, Chinese behemoth BYD announced its Dolphin model to the European market at less than $21,550. The model is a rebrand of the Chinese Seagull model.

In comparison, Western EV-maker Tesla’s Model 3, the brand’s cheapest offering, is being sold for $44,480 in the United Kingdom. Electric vehicles made by Tesla in China also face a 9% tariff on imports to the EU.

Even with the 17% levy, BYD’s Dolphin model will still be about $23,270 cheaper than the China-imported Tesla Model 3.

To better compete with fierce Chinese rivals, German brand Volkswagen has announced plans to develop a low-cost electric vehicle for the European market at a comparable price of around $21,476 by 2027.

“Now, profitability takes a back seat to market share. The investment community rewards new, innovative EV players on the promise what they could be rather than short-term financial performance that legacy manufacturers are measured,” said McCabe.

“If they really have to kill the EV industry in China, they have to put in 300% of tariffs … which, you know, doesn’t make sense from my perspective,” William Ma, CIO of GROW Investment Group told CNBC’s “Street Signs Asia” on Tuesday.

If the Chinese original equipment manufacturing sector is affected, the risk of retaliatory tariff measures from China against Europe is high, McCabe warned.

EU tariff talks started in June as a response to “unfair subsidies” to Chinese EV makers, which pose “a threat of economic injury” to European EV counterparts.

“This geopolitical or sanction will not go away easily for the next year or two,” Ma said.

SINGAPORE — As the world’s oil traders and analysts gathered at the annual Asia Pacific Petroleum Conference in Singapore last week, the slump in oil and where it was headed was foremost in everybody’s mind.

China, the main engine driving the world’s oil demand, has been sputtering. In the International Energy Agency’s most recent September report, year-on-year global oil demand grew 800,000 barrels per day in the first half of 2024, decelerating to its slowest growth since 2020 .

The main reason for the downturn is a “rapidly slowing China,” where consumption contracted for the fourth consecutive month in July, year on year. China is the world’s largest importer of oil as well as the second-largest consumer, making up 15% of global oil consumption. 

This tepid demand, coupled with oversupply, drove U.S. crude prices to their lowest in over a year earlier this month. Iraq and Kazakhstan, key OPEC+ members, have produced above their monthly quotas under the oil group’s agreement.

Members of the alliance recently postponed plans to hike a planned output increase of 180,000 barrels per day in October, as part of a program to return a broader 2.2 million barrels per day to the market over the following months.

Given the situation, lower oil prices were the dominant theme in Asia’s largest oil conference. The question was not whether oil will go lower, but mostly by how much will it decline in the coming years.

Goldman Sachs’ Co-Head of Global Commodities Research Daan Struyven estimated that crude prices could fall to the low $60s per barrel level by within the next two years, if China demand remained tepid. He did not rule out an even steeper decline.

“We estimate that Brent could fall to roughly $50 per barrel in a moderate [U.S.] recession … We have a fairly benign view on the global economy,” Struyven said during the conference.

The U.S. economy has remained resilient even as high interest rates aimed at curbing sticky inflation have slowed growth and raised recessionary concerns. That said, Americans believe that the U.S. is already in a recession, according to a survey.

“Things are slowing down. Doesn’t mean a bust, I don’t think so. Stagnant? Perhaps, and that’s bad enough for oil,” said Torbjörn Törnqvist, CEO of commodities trading house Gunvor.

Trading Giant Trafigura raised concerns about China’s weak demand, and the global oil consumption tied to it.

“It’s hard to look beyond China when thinking about the supply and demand balance for next year,” Ben Luckock, Trafigura’s global head of oil, told CNBC on the sidelines of the conference.

“I suspect we’re probably going to go into the 60s sometime relatively soon,” he said. Global benchmark Brent is currently trading at $73.09 per barrel, while U.S. West Texas Intermediate is at $70.57 per barrel.

Oil prices have fallen in spite of ongoing tensions in the Middle East, as well as the Russia-Ukraine conflict.

Luckock, however, warned about becoming too bearish.  “It’s dangerous because there’s so many events out there that can ruin your day.”

“I wouldn’t put all your chips on the table being short,” he added.

China’s slowdown has spurred some to scour for alternative oil demand drivers, with a few eyeing India as a potential candidate. India is the third largest consumer of oil at around 5 million barrels of oil per day, 5% of the world’s oil consumption. 

According to IEA’s projections, India is poised to lead oil demand growth in 2024, surpassing China for the first time with an estimated increase of 200,000 barrels per day.

India is the world’s fastest growing large economy, and is targeting to overtake both Japan and Germany to become the world’s third-largest economy in as soon as 2027.

Hong-Bing Chen, general manager at Chinese refiner Rongsheng Petrochemical said that he sees further growth in India, as well as more consumption of gasoline and gas oil from the the South Asian nation.

Others experts were more circumspect.

“Keep in mind that Indian demand is one-third of Chinese demand,” said Vandana Hari, founder and CEO of Vanda Insights. “So is there going to be another China in terms of global oil demand growth in our lifetime or potentially thereafter? I don’t think so,” she said.

India’s growth rate will be consistent and over the long term, well into the mid 2040s, but it’s not going to be the same size and magnitude as that of China’s, said Fereidun Fesharaki, chairman of energy consultancy Facts Global Energy.