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Europe investigates China’s electric vehicle subsidies surge as imports surge.

(Qnnflash) — The European Union is initiating an inquiry into the provision of state support by China to electric vehicle manufacturers due to concerns over the escalating importation of these vehicles and the potential implications for the longevity of European automotive producers.

During her address to the European Parliament on Wednesday, Ursula von der Leyen, the President of the European Commission, expressed Europe’s willingness to engage in competition while emphasizing the importance of avoiding a detrimental race to the lowest standards or quality.

According to von der Leyen, the global markets are currently experiencing an influx of affordable electric vehicles, which are being maintained at artificially low rates due to substantial government subsidies. I am pleased to inform you that the commission will be commencing an anti-subsidy inquiry into electric automobiles originating from China.

Europe imposes a 10% tariff on imported automobiles from China. This is in contrast to the duty rate of 27.5% imposed in the United States. Consequently, Chinese manufacturers have effectively capitalized on this opportunity, establishing a substantial and swiftly expanding presence in the European market.

According to data from the China Passenger Car Association, Chinese enterprises have witnessed a significant surge in electric vehicle (EV) exports to nine European nations during the first half of the current year. The number of EVs sold during this period exceeded the total exports made in the entirety of 2022. Over the course of the past five years, there has been a fourfold increase in the importation of Chinese automobiles by the European Union.

According to a recent assessment by UBS, it is projected that Chinese automobile manufacturers may have a significant increase in their worldwide market share, perhaps doubling from 17% to 33% by the year 2030. Conversely, European companies are expected to face the most substantial decline in market share over this period.

The results of the European Commission’s investigation may lead to the imposition of tariffs on imports of electric vehicles (EVs) from China. The recent announcement made by von der Leyen has caused significant fluctuations in the stock prices of China’s largest EV companies that are listed in Hong Kong. The company BYD, which has the support of Warren Buffett, experienced a decline of 2.8% in its stock price. Similarly, Xpeng observed a decrease of 2.5%, while Nio experienced a slight decline of 0.9%.

The probe has elicited significant concern and discontent from China’s Commerce Ministry, as expressed on Thursday.

A representative from the Chinese Ministry reportedly stated that China views the investigative measures proposed by the European Union as a way to protect its own industry under the guise of promoting “fair competition.”

The spokesperson expressed concerns about the protectionist nature of the act, emphasizing its potential to significantly disrupt and distort the global automotive industry chain and supply chain, both within the European Union and with respect to China-EU economic and trade relations.

According to a spokesperson from BYD, which is recognized as the leading electric vehicle (EV) manufacturer in China, the company has set a goal to increase its dealer partners in Europe to 200, effectively doubling the current number. This information was shared with reporters during a recent press briefing. The corporation has outlined its intention to achieve a target of 250,000 vehicle sales in overseas markets by the year 2023, as opposed to the 55,916 units sold in 2022.

“Unjust competition”

According to the European Automobile Manufacturers’ Association (ACEA), the automotive sector in Europe supports employment for over 13 million individuals, constituting approximately 7% of the total workforce. In the Federal Republic of Germany, prominent automotive companies, including Volkswagen, Audi, BMW, and Mercedes-Benz, occupy a central position within the largest economy in Europe.

According to a report by Reuters, Robert Habeck, the Minister of Economy in Germany, expressed his approval of the European Commission’s probe.

The individual expressed that the matter at hand pertains to unjust competition, rather than the prevention of efficient and affordable automobiles from entering the European market.

Senior executives from the German and French industries have expressed concern about the growing popularity of Chinese electric vehicles (EVs), according to a study by Jato Dynamics. These executives have highlighted that Chinese EVs are approximately 30% more affordable compared to their European and American counterparts.

The Chief Executive Officer (CEO) of BMW, Oliver Zipse, has expressed concern regarding the European Union’s (EU) prohibition on the introduction of new conventional automobiles starting in 2035. Additionally, Zipse has highlighted the escalating competition from China as a potential factor that may lead to the displacement of European automakers from the mass-market car manufacturing sector. According to Renault CEO Luca de Meo, Chinese competitors have demonstrated a significant advancement that surpasses our current capabilities.

Sigrid de Vries, the director-general of ACEA, was pleased with Ursula von der Leyen’s announcement. De Vries expressed appreciation for the European Commission’s recognition of the growing asymmetry in the industry and their prompt attention to the issue of distorted competition within the sector.

Unrestricted and equitable trade was crucial to the development of a successful European automotive industry and its subsequent global success. Nonetheless, the fundamental tenet of “free and fair” commerce necessitates an equitable environment for all participants, characterized by mutually beneficial trade practices and regulations governing market access. She emphasized the significance of everyone in the market understanding this in a statement.

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