EU Launches China EV Subsidy Probe

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Facts

  • On Wednesday, the EU announced an investigation into Chinese subsidies for electric vehicles (EV) sold in Europe, alleging that 'global markets are now flooded with cheaper electric cars and their prices [are] kept artificially low by huge state subsidies.'1
  • According to the China Passenger Car Association, around 350K Chinese EVs were exported to nine European nations in the first six months of 2023, with this number having quadrupled in the last five years.1
  • At this rate, investment firm UBS predicts that China's global share of EVs will nearly double from 17% to 33% by 2030.1
  • The European Commission's investigation — expected to take around one year to conclude — could result in tariffs on EV imports from China if the bloc assesses that Beijing's EV subsidies impose on Europe's auto industry.2
  • The EU's chief trade official, Valdis Dombrovskis, is scheduled to visit Beijing next week to discuss foreign commerce and the economy. His visit will give China an opportunity to present its case over the probe.3
  • Meanwhile, Beijing responded on Thursday, claiming that the EU's decision is a “protectionist” act aimed at distorting the supply chain and warning that it would damage economic and trade relations.4

Sources: 1CNN, 2Wall Street Journal, 3Bloomberg and 4Reuters.

Narratives

  • Anti-China narrative, as provided by Www.euractiv.com. The EU cannot stand by while China floods global markets with artificially cheap electric vehicles. Chinese EV manufacturers undercut European companies not because they're better at it, but because their government overflows the market with cash. Furthermore, this is only an investigation, so China should save its complaints until a report is issued.
  • Pro-China narrative, as provided by Global times. If the EU were to examine the development of China's electric vehicle industry objectively, it would find that Chinese EVs generally retail for nearly twice as much in Europe as they do in China, not because of state subsidies but because of the highly competitive industrial supply chain resulting from strong market competition. The EU's accusations have nothing to do with reality — they're only about protectionism.

Predictions