Europe opens probe into China over cheap EVs flooding EU

European Commission President Ursula von der Leyen announced the investigation on Wednesday, saying the global market was flooded with cheap Chinese cars.

“Their prices are kept artificially low through huge state subsidies. This is distorting our markets,” the head of the EU’s executive agency said in his annual speech to the European Parliament. “Because we don’t accept this distortion from within the market, we don’t accept this distortion from the outside.” Play video

The investigation is being launched despite fears of Chinese retaliation, a sign of growing concerns about the ability of European manufacturers to compete with Chinese industry.

Electric vehicle leader BYD Co’s losses widened to 2% in Hong Kong. At the same time, Xpeng Motors also fell 2.8%, and Li Auto also fell. The intraday low was as high as 0.5%.

The Stoxx 600 Automobile and Parts Index rose as much as 2.2%, the largest intraday gain since July 27, and was the best-performing sub-sector in the European stock market as a whole. Renault shares rose 4.9% and Volkswagen shares rose 2.6%.

China has a large number of electric car manufacturers and is supported by government incentives for the industry and buyers, but many emerging companies are not yet consistently profitable.

Promote sales

Chinese carmakers including BYD and new entrant NIO are preparing to boost sales in Europe with a range of competitively priced electric models that, if successful, would hit the mass market like Stellantis NV and Volkswagen manufacturer. At home, Chinese automakers are under pressure as slowing consumer demand has triggered a fierce price war.

BYD, which this year replaced Volkswagen as China’s best-selling car brand, has expanded to about 15 countries in Europe.Its Atto 3 crossover SUV is best selling electric cars July in Sweden. The company plans to offer new models including the Seal sedan, which will go on sale in Germany later this year with a starting price of about 45,000 euros. That puts it in direct competition with Tesla’s Model 3 and several Volkswagen vehicles.

The EU has an effective ban on internal combustion engine cars from 2035 as part of its ambitious Green Deal emissions reduction plan.

The EU launched a temporary review of its state aid rules this year in response to massive subsidies from the United States and China, particularly in green technology. The EU is particularly concerned about China’s economic practices, calling on Beijing to open its markets to rebalance bilateral trade relations and develop new tools to address China’s coercive practices against countries such as Lithuania.

The investigation into Chinese electric cars is a victory for the French government, which has long warned that an influx of Chinese cars would undercut the prices of similar products made in Europe.

The finance ministry is already working to adjust France’s state-funded bonus for buying electric cars, ostensibly with the aim of limiting subsidies to vehicles equipped with batteries with a low carbon footprint. But Finance Minister Bruno Le Maire said the measure would benefit European production and prevent French public funds from financing Asian factories.

Le Maire urged Germany to take tougher measures to protect European industry in Berlin on Wednesday.

“We now need a European industrial strategy that is more proactive, more innovative and more protective of our industrial interests related to China and the United States,” Le Maire said. explain It airs on French LCI TV on Tuesday. “There’s not a day to waste.”

Von der Leyen also needs to decide soon whether to stick with plans to impose tariffs on electric vehicle shipments between the EU and Britain starting next year, which some officials and industry say will hurt European carmakers and intensify competition from China.

According to previous reports by Bloomberg, the matter is still being debated internally and a final decision has not yet been made on whether to postpone the move.