Ten days after the Biden administration introduced a 100% tariff on on several categories of Chinese goods, including EVs, China has threatened to retaliate with tariffs on its own vehicle imports. Those threats are also targeted at the EU, as China’s Ministry is requesting the results of a recent probe while imploring Europe not to take the same action as the United States.

Trade tensions have continually risen among China, the European Union, and the US in recent years, with much of the drama surrounding imported EVs. Automakers in China, arguably the global leader in BEV technology and the most saturated market for New Energy Vehicles (NEVs), have begun expanding to new regions, including Europe.

Notable automakers like NIO, XPeng, BYD, and ZEEKR have all introduced multiple BEVs to countries in the EU, delivering advanced technology and luxury features at very competitive prices. The country has begun exporting so many EVs to Europe that automakers struggled to find ships to deliver them.

The new entry perturbed local EU automakers, some of which have lagged in EV adoption, inciting a probe into the Chinese automakers that the European Commission eventually determined have been “unfairly” subsidized as exports into the region. As a result, Europe has threatened tariffs on imports of vehicles built in China.

Across the pond, the US has already taken stern action on international trade with China, although none of the foreign automakers mentioned above have begun selling their EVs there. In late March, China’s Ministry of Commerce filed a complaint to the World Trade Organization targeting the US’ Inflation Reduction Act, deeming the policy unfair while imploring the US to play fair and follow the organization’s trade rules, citing the need for more EVs more quickly to battle climate change.

Instead, the Biden administration recently bolstered tariffs on goods originating from China, including solar panels, batteries, medical supplies, and, of course, EVs. Those tariffs have been increased from 25% to 100%, raising tensions between the two global superpowers.

As a response, China is threatening tariffs of its own with hopes the EU won’t opt for the same route the US took.

China poised to introduced tariffs as high as 25%

Per Automotive News Europe, the EU’s China Chamber of Commerce has been informed of the foreign nation’s threats of 25% tariffs from “insiders.” If enacted, the tariffs could significantly affect the businesses of US and EU automakers exporting ICE vehicles into China and would most certainly fuel international tensions that are already strained.

The threats from China have been tactful as we approach a deadline the country has given the EU to share the results of its probe on imported BEVs and unfair subsidies. Per reports, The EU has until early June to declare whether it also intends to impose tariffs on products from China, but the European Union doesn’t appear fazed by the threats. Eurasia Group analysts shared a note earlier this week:

China’s retaliatory trade investigations and warnings are not deterring the EU. Brussels is eager to send a strong signal to Beijing with its EV probe that the EU will counteract Chinese subsidies and overcapacity.

According to China’s Ministry of Commerce tariff page, the tariff on vehicles with engines larger than 2.5 liters imported from Europe is 15%. However, import tallies in that segment from 2023, World Trade Organization policies permit China to increase that number to a 25% fee on every large engine vehicle coming in.

To show it is serious, China has also alluded to the possibility of imposing additional tariffs on products coming over from Europe, including wine and dairy products.

As the largest producer of electric vehicles in the world, China has cause for concern about the current and looming threats of tariffs from its international trade partners. Trust that the global market has an eye on this situation, which could prove detrimental to the speed at which EV adoption grows worldwide.

Lucid (LCID) is the latest EV maker to reveal job cuts to reduce costs. As part of a new restructuring plan, Lucid plans to reduce its US workforce by 6%, or about 400 employees.

Lucid cuts workforce amid new restructuring plan

In an 8-K filing Friday, Lucid announced a new restructuring plan, which includes cutting around 400 jobs.

CEO Peter Rawlinson emailed employees on May 24, 2024, explaining the new job cuts amid plans to restructure its US and contract workforce. Rawlinson said the reduction will “not impact our hourly manufacturing and logistics workforce.”

However, it will impact “employees at all levels, including leadership and mid-level management.”

The job cuts amount to about 6% of Lucid’s US workforce. Lucid expects to complete the new plan by the end of Q3 2024.

Under the new plan, which mainly consists of severance payments, employee benefits, and stock-based compensation, Lucid expects around $21 to $25 million in charges. About $19 to $23 million will be primarily reported in Q2, with most of the charges expected to be paid by the end of Q3 2024.

Lucid expects most of the expenses to be cash expenditures. Meanwhile, changes to stock-based compensation are “not expected to be material,” according to Lucid.

Rawlinson explained that “letting go of our talented team members is difficult and a decision we did not take lightly” and thanked everyone who had helped the company grow.

The news comes ahead of what could be Lucid’s most important model yet. Lucid is set to launch production of its first electric SUV, the Gravity, by the end of the year. Lucid’s CEO said, “I’m confident Lucid will deliver the world’s best SUV and dramatically expand our total addressable market.”

Since the program is still losing money, “we must remain vigilant about costs.” He stressed, “Today’s decision is about positioning us for future growth.”

Lucid set a new delivery record in the first quarter and is seeing the momentum continue into Q2. Rawlinson boasted, “I want to stress that the future is bright at Lucid.”

The news comes after several rivals, including Rivian, reduced their workforces in an effort to increase profits.

Lucid’s stock is down around 4% following the news. LCID shares are now down over 65% over the past 12 months.

Electrek’s Take

Lucid generated $172.7 million in revenue in Q1, up from $149.4 million a year ago. Meanwhile, the EV maker reduced operational losses ($729.9 million vs $772.2 million) as it looks toward its next growth stage.

The Gravity is expected to open up new markets for Lucid, significantly expanding its addressable market.

With another $1 billion investment from Saudi Arabia’s Public Investment Fund (PIF), Lucid ended the quarter with over $5 billion in liquidity.

Lucid expects to build around 9,000 vehicles this year, nearly the same as the 8,428 units made in 2023. Following the Gravity, Lucid plans to launch a new mid-size electric SUV that will expand its market drastically.