The European Commission has launched an investigation into the import of Chinese electric vehicles to Europe, saying they are benefiting from subsidies provided by the Chinese government and threatening the livelihood of European automakers.
The so-called “anti-subsidy investigation” intends to determine whether the European Union follows through on earlier threats to impose punitive tariffs on Chinese EVs imported into the 27-country bloc.
The announcement of the investigation was made after calls from the French government to help protect European automakers from insurgent Chinese EV imports.
Speaking at a State of the Union speech in Strasbourg, France, European Commission President Ursula von der Leyen says: “Global markets are now flooded with cheaper electric cars. And their price is kept artificially low by huge state subsidies.”
The investigation by the commission, the European Union’s executive branch, could open the way for the EU to impose additional import taxes and levies against Chinese-produced EVs that it says are benefiting from Chinese state financial support.
“This is distorting our market. And as we do not accept this from the inside, we do not accept this from the outside. So, I can announce today that the Commission is launching an anti-subsidy investigation into electric vehicles coming from China,” von der Leyen says, adding: “Europe is open to competition but not to a race to the bottom. We must defend ourselves against unfair practices.”
Among the Chinese automakers seen to be benefiting from Chinese state subsidies and low pricing is Shanghai Automotive Industry Corp., or SAIC. Its MG brand, although not entirely electric, saw its European sales increase 128% during first-half 2023 compared to a year earlier at 104,293 units on the back of strong sales of the electric-powered MG4.
Formerly a British brand, MG was sold by Rover to China’s Nanjing Automobile in 2005. After apparent Chinese government intervention, it was subsequently purchased by SAIC in 2007 and twinned with the Roewe brand.
The investigation by the EC aims to head off a similar import-led push by Chinese manufacturers that devastated Europe’s solar panel industry. However, caution is being called for. With many European automakers dependent on the Chinese market for sales volume, potential retaliation by China could further harm profitability.