13 Sep 23

Europe will launch anti-subsidy inquiry into Chinese EVs

Europe will launch anti-subsidy inquiry into Chinese EVs

Against the fears that low-cost China-made electric vehicles (EVs) may cause huge losses for European automakers, the European Union (EU) will open an anti-subsidy investigation. China wants Europe to reconsider the decision.

The inquiry was announced by the European Commission (EC) President Ursula von der Leyen at the annual State of the Union address at the European Parliament. In her remarks, von der Leyen said that the EV sector is a crucial industry for the clean economy with a huge potential for Europe, but the global markets are flooded by low-cost Chinese electric cars, their prices kept artificially low by vast state subsidies. 

“We have to be clear-eyed about the risks we face”, said von der Leyen, stating that the surge of cheap Chinese EVs “is distorting our market.” Von der Leyen added that Europe can not accept this from the inside or the outside, announcing the anti-subsidy inquiry into EVs made in China. 

“Europe is open to competition but not to a race to the bottom. We must defend ourselves against unfair practices”, von der Leyen said. 

Von der Leyen reinforced her statements with the example of the solar industry, which China’s unfair trade practices have negatively impacted. Many startups were forced to pull out of the industry, while others filed for bankruptcy and talents left Europe in search of fortune abroad, she said. 

China wants EU to reconsider

Following the announcement of the inquiry, China warned the EC that an investigation into EVs may damage business relations and push the prices for European customers. China's EU Chamber of Commerce said the EC should not follow "unilateral trade tools to block China's EVs in the EU and raise their costs" and reconsider the decision on the inquiry.

The announcement of the anti-subsidy inquiry reflected the accumulating fears of the European auto industry and made France especially happy, which has been pushing for the investigation. The increasing dominance of Chinese EVs in the European market has often been voiced. Research in the past showed that a Chinese EV is around €10,000 cheaper than a European EV, thanks to the subsidies the Chinese government provides for local EV makers.

Another reason is China’s market strategy, said APAC expert Baran Gumusel to Global Fleet. Foreign companies seeking rich mineral supply in China had to form joint ventures in the country during the transition to an open market policy, and this resulted in foreign companies grabbing a larger share of the domestic market while Chinese companies started to dominate Europe. 

According to the EC, necessary measures must be put in place within 13 months of initiating an anti-subsidy inquiry. Provisional measures must become active no later than nine months, followed by four months to set certain measures after legally warranted. 

The main image is courtesy of Shutterstock, 1243996912.

Authored by: Mufit Yilmaz Gokmen