According to a source with knowledge of the situation on Friday, BMW’s all-electric Mini manufactured in China is expected to face the highest EV tariff of 38.1% under the EU’s provisional plans, which might be a fatal blow to the mid-range car’s sales prospects.

Produced by a joint venture between BMW and China’s Great Wall Motor Co Ltd, mass manufacturing of the about 35,000-euro ($37,345) car started late last year, just after the EU opened its investigation.

The source, who wished to remain anonymous due to private negotiations, claimed that because the JV was still in the early stages of production, it was unable to provide the European Commission with the necessary degree of information in its survey to be considered a firm assisting with the inquiry.

Lower taxes of 17.4%–21% applied to companies viewed as collaborating with the EU, according to a European Commission document obtained by Reuters. This includes BMW Brilliance Automotive, a different BMW joint venture that began producing the electric iX3 in 2021 and exporting it to Europe.

BMW did not respond to a request for comment. Oliver Zipse, the CEO of BMW, expressed earlier this week that the tariffs were the “wrong way to go,” expressing sympathy for other German automakers who are worried that a trade war may result in countertariffs on German auto exports to China.

Without indicating whether more recently established ventures may profit from the reduced 21% rate for businesses that collaborated with the European Commission investigation, the European Commission said that joint ventures manufacturing vehicles in China would be subject to tariffs.

Germany claims that in response to China’s levies on electric vehicles, it expects “serious movement.”

The Mini’s estimated 38.1% price increase might hurt sales at a time when the automaker is depending on every anticipated all-electric sale to help achieve more stringent carbon emissions objectives. The Mini was scheduled for shipment from China to Europe.

Provisional measures may only be used until July 4. After that, the probe will last into late October. This gives Beijing and Brussels time to work out a compromise to lessen the damage. Following the application of the temporary duties, companies have the option to file comments and request hearings.

(Adapted from Investing.com)