Much more so than Australia, the European market has seen an influx of electrical cars from China – and the European Commission desires to do something about it.
The President of the manager branch of the European Union, Ursula von der Leyen, has announced the launch of an anti-subsidy investigation.
“Global markets are actually flooded with cheaper Chinese electric cars. And their price is kept artificially low by huge state subsidies,” said President von der Leyen in her annual speech to the European Parliament on Wednesday.
“That is distorting our market. And as we don’t accept this from the within, we don’t accept this from the skin.
“So I can announce today that the Commission is launching an anti-subsidy investigation into electric vehicles coming from China.
“Europe is open for competition. Not for a race to the underside. We must defend ourselves against unfair practices.”
The President called for “open lines of communication and dialogue with China” and said she desired to “de-risk, not decouple”.
Nevertheless, the Chinese government has already responded, releasing a press release criticising the probe.
“[The investigation] is a unadorned protectionist act that can seriously disrupt and warp the worldwide automotive industry and provide chain, including the EU, and can have a negative impact on China-EU economic and trade relations,” China’s Ministry of Commerce said in a press release.
“China pays close attention to the EU’s protectionist tendencies and follow-up actions, and firmly safeguard the legitimate rights and interests of Chinese firms.”
The secretary general of the China Passenger Automotive Association, Cui Dongshu, said the worth of Chinese-made cars exported to Europe is usually almost double what they sell for in China.
The organisation says EV exports are booming not due to subsidies from the Chinese government, but due to a highly competitive supply chain.
But EU officials imagine Chinese brands are undercutting European-built EVs by around 20 per cent within the European market.
The European Commission said China’s share of the EV market in Europe has risen to eight per cent and will reach 15 percent in 2025.
The annual China-EU summit is happening later this 12 months, and there should actually be some energetic discussion on electric automotive pricing.
The probe was reportedly initiated by the European commission, and never from a selected industry criticism – although figures like Stellantis CEO Carlos Tavares have been vocal concerning the threat posed by Chinese brands.
Bloomberg reports the probe could take as much as nine months and result in tariffs near the 27.5 per cent level imposed on Chinese EVs by the U.S.
Hefty tariffs within the U.S. have kept Chinese brands away from certainly one of the world’s largest recent automotive markets, with only a handful of Chinese-made models offered there – and major players like SAIC Motor, owner of MG, not entering the market.
In contrast, MG is the best-selling Chinese brand in Europe. In the primary half of 2023, it outsold brands like Cupra, Mazda and Jeep based on data from JATO Dynamics.
The brand new, reasonably priced MG 4 electric hatchback helped it to spice up volumes by 128 per cent compared with the primary half of 2022.
BYD can be expanding rapidly, while other brands like Nio, HiPhi, Hongqi, XPeng and GWM’s Ora have entered the EV market there, with Leapmotor and Geely’s Zeekr also announcing launches.
Industry analysts have speculated the probe could stop additional Chinese brands from entering the market and for existing brands to slow their expansion, which could be a boon for European brands were it not for the potential threat of countermeasures from China.
That has the potential to rattle major European automakers just like the Volkswagen Group, which have a major presence within the Chinese market. Bloomberg also notes around a 3rd of BMW’s earnings before interest and tax come from China.
President von der Leyen specifically cited the influx of solar firms from China, and warned she didn’t wish to see a repeat of this.
“Now we have not forgotten how China’s unfair trade practices affected our solar industry,” she said.
“Many young businesses were pushed out by heavily subsidised Chinese competitors.”
This Article First Appeared At www.carexpert.com.au
