EU Launches Probe Into Chinese EV Subsidies

European Union’s executive arm European Commission has launched an investigation into Chinese domestic subsidies given to electric vehicle makers, amid significant growth in imports. The probe reportedly will look into whether to impose punitive tariffs to protect EU producers against such cheaper cars.

Commission President Ursula von der Leyen, while speaking at her annual State of the Union address at the European Parliament about the anti-subsidy investigation into electric vehicles coming from China, said, “Europe is open to competition but not for a race to the bottom.”

Meanwhile, responding to the news, Chinese Commerce Ministry accused the EU of blatant protectionism, and urged dialogue to safeguard Chinese companies’ interests and commit to global efforts to address climate change and achieve carbon neutrality, reports said.

In her speech, von der Leyen said, “Take the electric vehicle sector, it is a crucial industry for the clean economy with a huge potential in Europe, but global markets are now flooded with cheaper Chinese electric cars and their prices are kept artificially low by huge state subsidies.”

“This is distorting our market. And as we do not accept this from the inside, we do not accept this from the outside,” she added.

According to von der Leyen, the EU must defend themselves against unfair practices, but equally, it is vital to keep open lines of communication and dialogue with China as they can and have to cooperate on various topics.

“De-risk, not decouple – this will be my approach with the Chinese leadership at the EU-China Summit later this year, she further said.

The commission’s anti-subsidy investigation reportedly must impose any measures within 13 months from initiation. Provisional measures are required to be imposed no later than nine months, followed by four months to impose definitive measures if legally warranted.

While talking about the move, the President also indicated that China’s unfair trade practices had affected EU’s solar industry, and that many young businesses were pushed out by heavily subsidised Chinese competitors.

The industry and tech companies like competition as they are good for business and creates and protects good jobs in Europe, but competition is only true as long as it is fair, she said.

Meanwhile, European companies are excluded from foreign markets or are victims of predatory practices too often and undercut by competitors benefitting from huge state subsidies.

She further said that the EU is now attracting more investment in clean hydrogen than the US and China combined.

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