This week, SAIC Motor Corporation encountered a temporary import duty imposed by the European Union, significantly higher than expected. Morgan Stanley analysts believe this could be a "significant setback" for the Chinese automaker.
SAIC Motor is subject to a 38% import duty on its New Energy Vehicles (NEVs) exported to the EU, the highest among its peers. Previously, SAIC had anticipated a 20% duty.
The duty was announced earlier this week, primarily due to concerns from EU lawmakers about increased competition from Chinese electric vehicle manufacturers against local automakers.
These duties will take effect on July 4, although the final decision and duty rates will be made in November.
Morgan Stanley analysts stated that while this decision is a major setback for SAIC Motor, they still expect the company to take measures to mitigate its impact. In 2023, SAIC exported 80,000 to 100,000 NEVs to the EU, with rising demand for the MG brand.
Analysts also noted that SAIC has time until November to make its case.
According to Chinese media reports, SAIC expressed "deep disappointment" with the tariffs, and negotiating with the EU alone could be very challenging for the company.
SAIC's Shanghai stock price fell by 1.6% on Thursday. Morgan Stanley has a "Overweight" rating on the stock, with a target price of 17.50 yuan, representing nearly 14% upside from current levels.
Several other Chinese peers of SAIC have also been hit with import duties ranging from 17% to 38%, with BYD facing the lowest duty among them.
