Brussels (Brussels Morning) – The European Commission investigates China’s electric vehicle subsidies, aiming to determine fair trade practices and potential tariffs on exports.
China’s commerce minister will tour Europe in April for dialogues about the European Commission’s investigation into whether China’s electric vehicle industry has profited from unfair subsidies. The commission has started an investigation to determine whether to charge tariffs on exports to protect European car architects. It is due to be finished by November, though the EU executive could set provisional duties earlier.
The commission has stated China’s share of EVs traded in Europe could reach 15% of the market in 2025, established on their price discount likened to battery-powered cars made in Europe. China has contested the assertion that its EV industry has growled because of subsidies and named the EU inquiry “protectionist”. Analysts state factors including China’s domination of the battery supply chain, creation and cut-throat competition in a bursting domestic market have also reduced prices.
European Commission investigators examined Chinese carmakers earlier this year as part of their investigations. Those assessments targeted market leaders BYD, Geely and SAIC, people affected in the process said in January.
Wang Wentao will also visit France starting April 7 and will be escorted on the trip by representatives of BYD, SAIC and Geely, the businesses that have already hosted Commission operatives, one of the people with knowledge of the trip stated. Wang will also observe a China-Italy business forum in Verona, Italy, on April 12, alongside the nation’s foreign minister Antonio Tajani, the Italian government stated.
EU-China trade strains more broadly are also expected to be discussed when Chinese President Xi Jinping is scheduled to visit his French counterpart in May. France has supported the commission investigation, part of a years-long movement by President Emmanuel Macron for the EU to get harder on trade and insist on a level playing domain. In reaction, China launched in January an anti-dumping inquiry into brandy, which was considered especially aimed at France as it accounts for nearly all EU brandy exports to China, Chinese customs data indicates.
France’s cognac industry organisation said in January it would fully collaborate with Chinese authorities, but that it considered the inquiry was linked to a broader trade row rather than desired at the liquor market. Surpassing Japan China became the largest exporter of cars last year, overtaking Japan, a trend analysts have said mirrors the massive overcapacity of production within China given the extent of its domestic market. Popular Chinese models exported to the EU include SAIC’s MG and Geely’s Volvo. Tesla is also a significant EV exporter to Europe from its manufacturer in Shanghai, the US company’s largest and most productive plant.
Including petrol-powered cars, China could deliver 43 million vehicles annually as of the end of 2022, but its factory utilisation rate — a measure that relates to profitability — was just under 55%, according to data from the China Passenger Car Association. Executives at Chinese carmakers, suppliers and analysts have privately examined and modelled the risk of some extra tariffs on China-made EVs exported to Europe for months. Chinese EVs already encounter a standard tariff of 10% in the EU.
In the US, Chinese-developed EVs have been kept out by tariffs of 27.5% and a packet of federal consumer incentives under the Biden government that they do not permit as imports. Some US legislators have forced higher tariffs. Chinese carmakers have been rolling out programs for more production in overseas markets, in position in response to the backlash over exports.
