BEIJING – Europe has launched an investigation into Chinese electric vehicle subsidies but should not make any assumptions about the findings, the EU executive’s trade chief said on Tuesday.
About two weeks ago, the European Commission announced an investigation into government subsidies for Chinese electric vehicle manufacturers.
Valdis Dombrovskis, the European Commission’s executive vice president and trade commissioner, told reporters on Tuesday that the investigation focused on subsidies for electric vehicle production and would be “based on facts.” He spoke in Beijing after a four-day visit to China.
He added that the investigation would be consistent with EU and World Trade Organization rules and involve contacts with Chinese authorities and businesses.
“The outcome of the investigation will be determined by those individuals…(I) cannot prejudge the outcome of the investigation,” Dombrovskis said.
China’s electric vehicle exports have surged in recent months. Moody’s said that considering exports of all types of cars, China has surpassed Germany and is expected to surpass Japan this year to become the world’s largest auto exporter.
Chinese local electric vehicle company Nioh, Xpeng and BYD These companies have begun expanding into Europe, but so far in relatively small numbers.More than two-thirds of China’s electric vehicles exported to Europe come from Tesla Other international brands are manufactured in China, according to HSBC.
However, the impact on the future of the business is huge.
Dombrovskis pointed out that the European Union plans to phase out the sale of internal combustion engine cars by 2035. He also said that in the past two or three years, the share of Chinese electric vehicle brands in the EU market has increased from less than 1% to 8%.
He told reporters that another element of the EU subsidy investigation is the “risk of damage” to the European auto industry.
European automotive giants such as Volkswagen It gets a lot of sales from China but has struggled to break into the fiercely competitive electric vehicle market. Earlier this year, Volkswagen and electric vehicle startup Xpeng Motors announced a strategic partnership to jointly develop vehicles for the Chinese market.
China’s Ministry of Commerce was quick to criticize the EU investigation, calling it a “blatant act of protectionism” that would distort the global auto industry.
Cui Dongshu, president of the China Passenger Car Association, also posted on the Internet that due to the fierce competition in the domestic supply chain and market environment, China’s new energy vehicle exports continue to grow.
Dombrovskis told reporters on Tuesday that the EU raised an investigation into electric vehicle subsidies at almost every meeting with its Chinese counterparts.
China’s electric vehicle ambitions began more than a decade ago. Wan Gang, a former Audi engineer, became China’s Minister of Science and Technology in 2007 and persuaded the central government to launch a national strategy for developing new energy vehicles and battery technology.
From 2009 to 2015, the central government spent at least 33.4 billion yuan According to the Treasury Department, subsidies for developing electric vehicles are $4.57 billion. Beijing prefers to classify electric vehicles into the broader new energy vehicle category.
The government-led push has not been without waste. In 2016, the Ministry of Finance said it found at least five companies cheating on the system by more than 1 billion yuan.
The country’s recent EV-related subsidies have focused on tax breaks for consumers. Electric vehicles are considered one of the bright spots in China’s economic slowdown and a driver of advanced manufacturing, retail and exports.
—CNBC’s Clement Tan contributed to this report.
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