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Brussels will launch a countervailing investigation into Chinese electric cars that “distort” the EU market, in what could become one of the largest trade cases ever launched given the size of the market.
European Commission President Ursula von der Leyen announced the investigation in her annual address to EU lawmakers on Wednesday. “The global market is now flooded with cheaper Chinese electric cars,” she said.
“Just as we do not accept this from the inside, we do not accept this from the outside. Therefore, I can announce today that the European Commission will launch a countervailing investigation into electric vehicles from China.”
European companies “often…” . She told the European Parliament in Strasbourg that she was “excluded from foreign markets”. “They are often undercut by competitors who benefit from huge state subsidies.”
The investigation has been planned for months, and von der Leyen expressed EU concerns about China’s electric vehicle trade practices to Chinese Prime Minister Li Qiang during a bilateral meeting on the sidelines of the G20 summit in New Delhi last weekend, according to a person familiar with the matter. The discussion was briefed.
Shares in Chinese electric carmakers sold off on the prospect of increased regulatory scrutiny from Brussels, with Warren Buffett-backed BYD down about 2% and rival Xpeng Motors down nearly 3%. Shares of other electric carmakers including Great Wall Motors and Li Auto also fell after the news.
EU member states are demanding action against Chinese carmakers in Europe, fearing that major domestic carmakers could lose their leadership position as the green transition reshapes the market.
The investigation could become one of the largest trade cases launched by the EU, which is trying to prevent its solar industry from a repeat of the early 2010s, when photovoltaic manufacturers were driven into bankruptcy by cheap Chinese imports.
Manufacturers could be hit with punitive tariffs if found to be violating trade rules.
As far as the solar industry is concerned, Brussels introduced a tariff regime on Chinese photovoltaic cell imports in 2012, but later deregulated it in order to promote the installation of renewable energy.
Senior Researcher Simone Tagliapietra said: “This is an important move by the European Commission showing its willingness to use trade tools more aggressively to protect European industry and avoid replicating the solar past in the key automotive sector. Experience with panel failures.” Bruegel, a think tank based in Brussels.
Chinese automakers have made no secret of their ambitions to dominate Europe’s electric vehicle industry, the largest EV market outside China.
BYD Europe president Michael Shu previously told the Financial Times that the brand planned to be among the top three brands by the end of the decade and to be number one “if possible”.
Many of Europe’s biggest carmakers have sounded the alarm about imported cars from China, saying lower energy and labor costs give them an advantage over European models.
Stellantis, owner of Peugeot, Europe’s second-largest carmaker, said it was considering building cheaper electric cars outside Europe and importing them to compete with Chinese models.
According to data from Schmidt Automotive Research, Chinese car brands’ share of the EU market has increased from less than 1% in 2021 to 2.8% this year.
But in the EV market, cars produced by Chinese manufacturers account for 8% of sales, said automotive data analyst Inovev.
In her speech, von der Leyen laid out the achievements of the commission during her tenure ahead of next year’s EU elections.
She also announced measures to improve access to finance and improve the auction system for the wind energy industry, which is struggling with similar competition from China, and pledged to start a dialogue with industry to simplify green legislation.
Europe also needs to “strengthen” its economic security in response to China’s own measures, such as export controls on key metals gallium and germanium, she said.
Additional reporting by Peter Campbell in London
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