Europe Launches Investigation into Chinese Electric Vehicle Subsidies
Europe has initiated an investigation into government subsidies for electric vehicle (EV) makers in China. The investigation, which focuses on subsidies for EV production, will be conducted in accordance with EU and World Trade Organization rules. Valdis Dombrovskis, executive vice president and trade commissioner of the European Commission, emphasized that the outcome of the investigation cannot be predetermined.
China’s Growing Electric Car Exports
China’s electric car exports have experienced significant growth in recent months. Moody’s reports that China’s total car exports have already surpassed Germany’s and are on track to exceed Japan’s as the largest car exporter globally this year. While companies like Nio, Xpeng, and BYD have started to expand to Europe, the majority of China’s electric car exports to Europe still come from international brands manufacturing in China, including Tesla.
Despite this, the European Union (EU) is concerned about the impact on its auto industry. Dombrovskis stated that the EU plans to phase out sales of internal combustion engine cars by 2035, and the market share of Chinese EV brands in the EU has grown from less than 1% to 8% in the past few years.
EU Investigation and Chinese Reactions
The EU’s subsidy probe has faced criticism from China. The Chinese Ministry of Commerce called it a “blatantly protectionist act” that would distort the global auto industry. However, Dombrovskis confirmed that the investigation was a topic of discussion in every meeting with his Chinese counterparts.
A Brief History of China’s Electric Vehicle Ambitions
China’s efforts in the electric vehicle sector began over a decade ago, with a national strategy for developing new energy vehicles and battery technology. Between 2009 and 2015, the Chinese government spent billions of yuan in subsidies on EV development. However, there were instances of fraud in the subsidy system, which the Ministry of Finance uncovered in 2016. In recent years, China has focused on providing tax breaks for consumers to promote the growth of the electric car industry.