The European Union’s decision to impose tariffs on Chinese electric vehicles has moved the focus to how and when Beijing will retaliate for the escalation in its biggest trade dispute with the bloc in years.

German Chancellor Olaf Scholz's rejection of EU tariffs on Chinese electric vehicles failed to stop fellow European Union members voting in favour, exposing how a divided Berlin is struggling to drive EU policy.

The EU conformed its decision to raise tariffs on Chinese EVs, leading to worries this might raise trade tensions.

The European Union unleashed one of its most powerful economic tools on China, imposing tariffs on electric vehicles in a move that increases the risk of retaliatory measures and backfiring on domestic consumers and companies.

Brian Gu, Xpeng’s co-president, argued Wednesday that fierce local competition, not state support, explains China’s EV success.

If EU tariffs are approved, Xpeng will be slapped with an additional 21.3% surtax. The brand also sees the US as an important market but can’t launch locally, at least not yet. Xpeng is open to contract manufacturing in Europe.

Options include contract manufacturing, tapping existing factories or a new assembly plant, top company official says.