EU anti-subsidy investigation into Chinese electric cars

The European Commission launched an investigation on Wednesday into whether to impose punitive tariffs to protect European Union producers against cheaper Chinese electric vehicle (EV) imports it says are benefiting from state subsidies.

“Global markets are now flooded with cheaper electric cars. And their price is kept artificially low by huge state subsidies,” European Commission President Ursula von der Leyen said in her annual address to the bloc’s parliament.

The Commission will have up to 13 months to assess whether to impose tariffs above the standard 10% EU rate for cars in the its highest profile case against China since an EU probe into Chinese solar panels narrowly avoided a trade war a decade ago.

The anti-subsidy investigation covers battery-powered cars from China, so also includes non-Chinese brands made there, such as Tesla, Renault and BMW and it is brought by the European Commission itself, rather than in response to an industry complaint.

The EU is seeking to reduce its reliance on China, particularly for materials and products needed for its green transition.

Chinese EV makers, from market-leader BYD to smaller rivals Xpeng and Nio, are stepping up efforts to expand overseas as competition intensifies at home and domestic growth eases. China’s auto exports surged 31% in August following a 63% jump in July, China Passenger Car Association (CPCA) data showed.

The average retail price of a Chinese-brand electric car in Germany was 29% lower than the average for non-Chinese EV models, not counting incentives or discounts, according to Jato Dynamics, while 32% lower in France and 38% lower in the UK.

The European Commission said China’s share of EVs sold in Europe has risen to 8% and could reach 15% in 2025, noting prices are typically 20% below EU-made models. Popular Chinese models exported to Europe include SAIC’s MG and Geely’s Volvo.