European Union to investigate subsidies to Chinese cars

By Redação AutoIndústria  | 9/14/23 | Translated by Jorge Meditsch

The strong and constant growth of Chinese electric vehicle exports seems to annoy the main occidental producer and consumer countries.

It is the cause of a recent initiative by the European Union to investigate Chinese government subsidies to these products that reach distant markets with very competitive prices.

In a speech at the European Parliament, Ursula von der Leyen, European Commision’s president, said this week that “cheap Chinese cars are inundating the global market” and “the prices are kept artificially low by enormous state subsidies”.

The European economic bloc already started the investigation, even fearing possible Chinese retaliation, showing the growing European manufacturers’ concern about the competition against the Chinese industry.

A commission has up to 13 months to consider possible penalties with import taxes over the bloc’s standard 10% for electric cars made in China, even by foreign brands.

The Munich Autoshow, held in Germany during the first week of September, was marked by the massive presence of Chinese brands, with many electric launches for the European market – many in vital segments for the main local manufacturers, such as Stellantis and Volkswagen.

The European Union has already defined the ban on internal combustion vehicles from 2035, which presses local manufacturers to reduce as much and as soon as possible electric models’ costs. Chinese cars already account for about 8% of Europe’s electric market, two times more than two years ago.

“We need now a very proactive European industrial strategy, protecting much more our industry’s interests from China and the United States”, said Bruno Le Maire, France’s Finance minister, in an interview with French media organs.

“It’s about unfair competition. It’s not about keeping cheap and efficient cars from entering the European market”, completed Robert Habeck, Germany’s Economy minister, who believes the inquiry would show competition rules violations.

More cautious, VDA, the influential German automotive sector association, issued a note about a possible Chinese reaction to the investigation and suggested that political authorities should strive to create a favorable environment for European manufacturers’ businesses by reducing input costs and bureaucratic hurdles.

Immediate reaction

China’s reaction was immediate. Yet this Thursday, 9/14, the country criticized the inquiry, calling the decision protectionist and alerting about the potential negative impact on economic and commercial relations with the bloc.

“It’s a flagrant protectionist act that will disturb and distort the global automotive industry and the supply chain”, asserted the Chinese Commerce Ministry in a note. “China will firmly safeguard Chinese companies’ legitimate rights and interests.