The European Commission (EC) said it had gathered ‘sufficient evidence’ that imports of Chinese electric vehicles (EVs) posed an economic threat to the bloc.
The EC has published a notice of initiation, officially kickstarting its investigation into possibly illegal Chinese electric car subsidies.
The document states that the EC has found evidence of loans at favourable rates, tax exemptions and components bought very cheaply. Should it consider this enough evidence of unfair practices, the bloc could impose tariffs on Chinese car manufacturers above the standard 10 per cent EU rate.
The probe was first announced last month, in EC president Ursula von der Leyen’s State of the European Union address. In the speech, von der Leyen warned that global markets were being “flooded” with cheaper Chinese electric cars.
“The EV sector holds huge potential for Europe’s future competitiveness and green industrial leadership,” she said. “EU car manufacturers and related sectors are already investing and innovating to fully develop this potential. Wherever we find evidence that their efforts are being impeded by market distortions and unfair competition, we will act decisively.”
The investigation has been deemed one of the most serious battles in the bloc’s journey towards reducing its reliance on Chinese products. It will cover any battery-powered cars made in China, which includes international brands such as Tesla, Renault and BMW, as well as Chinese carmakers.
China has attacked the move, calling it an act of “naked protectionism” and vowing to protect the “legitimate rights” of Chinese automotive companies.
Now that the investigation has officially begun, China has raised complaints regarding the “very short” time provided by the EU to engage in consultations. Chinese authorities also complained that they had not received adequate consultation materials.
The probe is a result of French government pressures, over fears that Chinese EVs will threaten European manufacturers. However, not all EU countries are equally supportive of the move, with Germany heavily relying on China for its own EV sales.
The investigation is a result of concerns over the rapid growth of Chinese EV exports, which quadrupled last year and rose 31 per cent in August alone, according to the China Passenger Car Association. The European Commission said China’s share of EVs sold in Europe could reach 15 per cent in 2025, due to average prices being typically 20 per cent lower than EU-made models.
China has warned that the investigation could harm bilateral trade agreements, and also lead to rising car prices for European residents.
The China Association of Automobile Manufacturers called the probe an “obvious act of protectionism” that would hinder the growth of the global EV industry.
The probe must be completed within 13 months, according to EU policy.
