Investing.com – The European Union this week imposed significantly higher-than-expected preliminary import tariffs on SAIC Motor Corp Ltd (SS:), which Morgan Stanley analysts said could be a “major setback” for the Chinese automaker.
SAIC imposed an import tariff of 38% on all new energy vehicles (NEV) exports to the EU, the highest among peers. SAIC had previously forecast tariffs of 20%.
The tariffs were announced earlier this week and come amid concerns among EU lawmakers about increased competition for local automakers from Chinese electric vehicle makers.
The duties will come into force on July 4, but the final decision on their introduction and scale will be made only in November.
MS analysts said that while the decision was a major setback for SAIC, they still expected the firm to take steps to offset the impact. The company exported between 80,000 and 100,000 NEV units to the EU in 2023 amid growing demand for its MG brand.
MS analysts also said the company has until November to defend itself.
Chinese media reports said SAIC was “deeply disappointed” by the tariffs and that negotiations with the EU could prove difficult for one company.
SAIC shares in Shanghai lost 1.6% on Thursday. MS is overweight the stock with a target price of RMB 17.50, representing an upside of nearly 14% from current levels.
Some of SAIC’s Chinese peers were subject to import duties ranging from 17% to 38%. BYD (SZ:) has the lowest tariffs among its peers.