BEIJING — Europe has launched an investigation into Chinese electric vehicle subsidies, but the outcome of the probe remains uncertain, said Valdis Dombrovskis, executive vice president and trade commissioner of the European Commission. Dombrovskis emphasized that the investigation will be “fact-based” and conducted in accordance with EU and World Trade Organization rules. The probe will involve engagement with Chinese authorities and businesses. Dombrovskis cautioned against making assumptions about the outcome of the investigation.
China’s electric car exports have experienced significant growth in recent months, surpassing Germany as the largest car exporter globally and on track to surpass Japan this year, according to Moody’s. Chinese electric car companies such as Nio, Xpeng, and BYD are beginning to expand to Europe, although in limited numbers. The majority of China’s electric car exports to Europe are from Tesla and other international brands manufacturing in China, according to HSBC.
The European Union plans to phase out sales of internal combustion engine cars by 2035, creating potential consequences for businesses. The EU’s subsidy probe also aims to address the “risk of injury” to the European auto industry. European automakers like Volkswagen have struggled to penetrate the highly competitive electric car market in China and have sought partnerships with Chinese EV startups.
China’s Ministry of Commerce criticized the EU investigation as a “blatantly protectionist act” that will distort the global auto industry. However, Dombrovskis revealed that the EU probe into EV subsidies was discussed in every meeting with Chinese counterparts during his visit to China.
China’s electric vehicle industry has seen significant government support over the past decade, with subsidies amounting to billions of yuan. While there have been cases of abuse and waste in the past, recent subsidies have focused on tax breaks for consumers. Electric cars are considered a driving force for China’s economy, manufacturing, retail sales, and exports.
— CNBC’s Clement Tan contributed to this report.
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