Chinese EV Makers' Shares Drop Amid Tariffs Concerns

By Jiahui Huang

Chinese electric vehicle makers' shares dropped in Hong Kong amid concerns that more countries could increase tariffs on cars imported from China.

XPeng's shares were down 4.5% at 30.95 Hong Kong dollars (US$3.96) by midday Tuesday while Li Auto was off by 4.3% and NIO lost 3.3%. Geely Automobile and Great Wall Motor were down 3.15% and 2.6%, respectively. The benchmark Hang Seng Index was 1.7% lower.

The selloff came after Turkey's trade ministry said Saturday that it will impose a 40% additional tariff on imports of cars from China. Investors are also keeping an eye on a European Commission announcement due this week that will detail the EU's plans on tariffs for Chinese cars.

The latest trade barriers for Chinese cars come after the Biden administration raised tariffs on Chinese EVs to 100% from 25% last month.

Both Turkey and the EU are key geographies for Chinese EV makers looking to expand beyond their home market, marking the first foray abroad many.

Chinese automakers made up 9.0% of the Turkish market from January to April this year, data from Turkey's Automotive Distributors and Mobility Association showed.

State-owned Chery and SAIC's MG Motor brand are the top two Chinese players in the Turkish auto market, with 20,782 and 7,185 units sold in the first four months of the year, the association's data showed. SAIC's shares were down 1.1% in Shanghai by midday Tuesday.

BYD entered the Turkish market last November, selling 862 units in the first four months of the year. Rival Tesla sold 402 units.

While Turkey's tariff hike might not have a huge impact on Chinese automakers 'earnings, it could be a sign of more trade curbs to come. That clouds the outlook for companies' expansion overseas right as the Chinese market becomes increasingly competitive and crowded.

"Investors are more concerned that more countries will follow the trend of raising tariffs on China's cars in the near future," CCB International analyst Qu Ke said.

That's of particular concern as Chinese EV makers' export volumes look set to rise sharply this year and next year, Bocom International auto analyst Angus Chan said.

Write to Jiahui Huang at jiahui.huang@wsj.com

(END) Dow Jones Newswires

June 11, 2024 01:37 ET (05:37 GMT)

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