EMN General Discussion, page-118

EU and China clash over anti-subsidy probe into Chinese EVs

• It was announced yesterday that the EU will launch an investigation into Chinese subsidies for EVs as Europe struggles to compete.
• European Commission President Ursula von der Leyen announced the probe, saying that “the global market is flooded with cheap Chinese cars and their price is kept artificially low by huge state subsidies [which] is distorting our market.”
• The probe is being opened despite concerns about retaliation from China, which is indicative of the growing alarm over the ability of European manufacturers to compete with China’s industry.
• Beijing has since warned that a probe into Chinese state subsidies would negatively impact economic and trade relations with the EU.
• EU officials believe Chinese EVs are undercutting the prices of local models by around 20% in the European market, piling pressure on European automakers to produce lower-cost EVs.
• The European Commission said China's share of EVs sold in Europe has risen to 8% and could reach 15% in 2025 – in 2022, 35% of all exported EVs originated from China.

The probe, which could result in punitive tariffs, has prompted analyst warnings of retaliatory action from Beijing and complaints from Chinese industry executives who say the sector's competitive advantage is not due to subsidies.