Europe to Investigate Chinese Subsidies for Electric Vehicles in Growing Industrial Competition
In a move that underlines Europe’s increasing competition with China in the field of electric vehicles (EVs), the European Union (EU) has announced an investigation into Chinese subsidies of EVs. Ursula von der Leyen, the president of the European Commission, made the announcement during her annual state of the European Union address.
China currently holds a dominant position in the global EV industry and views Europe as a lucrative market. This has raised concerns among European automakers who are striving to expand their lineups of battery-powered vehicles. The European manufacturers fear tough competition from low-priced Chinese models.
Ms. von der Leyen stressed the importance of fair competition, stating, Europe is open for competition, not for a race to the bottom. She also emphasized the significance of the EV sector for the clean economy and its enormous potential for Europe.
The president highlighted a pressing issue: the flooding of global markets with cheap Chinese electric cars that are kept artificially affordable through substantial state subsidies. This, in turn, distorts the European market. Many pioneering European companies have had to declare bankruptcy, while young businesses have been pushed out by heavily subsidized Chinese competitors.
The investigation into Chinese subsidies is part of the EU’s wider effort to combat what it perceives as anti-competitive behavior by China, which negatively affects European businesses across various sectors, including innovation and manufacturing. The EU aims to address this issue to safeguard its own jobs and revenue.
The strained political and diplomatic ties between Europe and China, owing to China’s support of Russia despite the invasion of Ukraine, have also contributed to the urgency of the EU’s actions. While the concept of de-risking the Europe-China relationship by reducing economic dependence on Beijing has been suggested, Ms. von der Leyen aims to maintain ties rather than sever them completely.
Strategically, Europe sees the need to keep China at bay, particularly when it comes to global supply chains for key components essential for manufacturing goods like semiconductors and solar panels.
The EU’s investigation into Chinese subsidies for EVs aims to address the concerns of European automakers and level the playing field. It is a signal of Europe’s determination to compete in the growing market for electric vehicles, while also maintaining its commitment to fair and sustainable practices within the industry.
