Europe investigates surge in Chinese electric car imports

author: FutureCar Staff    

The European Union is launching an investigation into China's state support for makers of electric vehicles as concerns rise over the impact on European auto manufacturers. European Commission President Ursula von der Leyen announced the investigation during a speech to the European Parliament, stating that while Europe welcomes competition, it does not support a "race to the bottom." Von der Leyen highlighted that the global market is flooded with cheaper electric cars due to significant state subsidies, leading to artificially low prices. As a result, the European Commission will be launching an anti-subsidy investigation specifically targeting electric vehicles imported from China.

Currently, Europe imposes a 10% duty on cars imported from China, significantly lower than the 27.5% duty levied by the United States. Chinese manufacturers have taken advantage of this discrepancy, establishing a strong presence in the European market. In the first half of this year, Chinese companies exported nearly 350,000 electric vehicles to nine European countries, surpassing the total exports for the entire year of 2022. Over the past five years, EU imports of Chinese cars have quadrupled. A recent estimate by UBS suggests that by 2030, Chinese carmakers could double their share of the global market from 17% to 33%, with European firms experiencing the largest loss of market share.

The European Commission's investigation may result in the imposition of tariffs on Chinese electric vehicle imports. Von der Leyen's announcement had an immediate impact on the stock prices of China's largest electric vehicle companies listed in Hong Kong. BYD, which is backed by Warren Buffett, saw a 2.8% decrease in its stock price, Xpeng fell by 2.5%, and Nio slipped by 0.9%. BYD, China's largest electric vehicle manufacturer, plans to double its number of dealer partners in Europe to 200 this year. The company aims to increase overseas sales to 250,000 vehicles in 2023, compared to 55,916 in 2022.

The European auto industry is a significant employer, providing jobs for approximately 13 million people and accounting for about 7% of all employment, according to the European Automobile Manufacturers' Association (ACEA). German economy minister Robert Habeck welcomed the European Commission's investigation, emphasizing that it is about unfair competition and not about preventing efficient and affordable cars from entering the European market. Senior German and French industry executives have expressed concerns about the growing threat posed by Chinese electric vehicles, which are around 30% cheaper than their EU or US counterparts.

BMW CEO Oliver Zipse has warned that the EU's ban on new conventional vehicles from 2035, coupled with the increasing competition from China, could push European automakers out of the mass-market car production. Renault CEO Luca de Meo has also acknowledged that Chinese rivals are currently a generation ahead of European manufacturers. ACEA director-general Sigrid de Vries welcomed von der Leyen's announcement, stating that it is a positive signal acknowledging the asymmetric situation faced by the European auto industry. De Vries emphasized the importance of fair trade and a level playing field among all competitors in the market.

In conclusion, the European Union is launching an investigation into China's state support for electric vehicle manufacturers due to concerns over the impact on European auto manufacturers. The investigation aims to address the flood of cheaper electric cars in the global market, which are kept artificially low in price through significant state subsidies. The investigation may result in tariffs on Chinese electric vehicle imports. European automakers, particularly in Germany, have expressed concerns about unfair competition from Chinese electric vehicles, which are significantly cheaper than their EU or US counterparts. The European auto industry is a major employer, and the investigation is seen as a positive step towards ensuring fair competition and a level playing field.

FutureCar Staff