EU begins investigation into Chinese electric cars, Beijing is “very unhappy”

The European Union (EU) has officially launched an anti-subsidy investigation into electric vehicles manufactured in China.

The year-long investigation, announced by European Commission (EC) President Ursula von der Leyen last month, will focus on new battery electric vehicles (BEVs) and alleged Chinese state subsidies, a legal notice in the EU's Official Journal confirmed on October 4.

Although narrow in scope, the investigation focuses on a large global industry that has seen a sharp increase in exports from China in recent years.

Despite concerns in various sectors that Beijing could retaliate, the EU wants to act now based on precedent in other subsidized sectors such as solar panels.

The Commission has gathered sufficient evidence that carmakers have benefited from subsidies granted by the Chinese government, the EU Official Journal said in a statement. “These subsidies have allowed subsidized imports to rapidly increase their market share in the EU, to the detriment of the EU industry,” the statement said.

This support includes direct cash transfers, uncollected government revenues, and the provision of goods or services by the government at less than adequate remuneration. The notice highlights evidence of “subsidies, the provision of loans, export credits and credit lines provided by state banks or bonds guaranteed by state banks and other financial institutions on preferential terms.”

World - EU begins investigation into Chinese electric vehicles, Beijing is “very unhappy” — Visitors look at car models at the booth of Chinese manufacturer BYD, during the International Motor Show Munich (IAA Mobility), Germany, September 5, 2023. Photo: Global Times

It also mentions income tax reductions and exemptions, as well as “dividend tax exemptions, import and export tax reductions; VAT exemptions and reductions; and government provision of goods (such as raw materials, inputs, and components)”.

The investigation will focus on new battery electric vehicles (BEVs) designed to carry nine or fewer people, including the driver. The notice did not name specific manufacturers, but the probe is expected to cover all manufacturers in China that export to the EU, including Tesla Inc. and major Chinese brands such as BYD Co., SAIC Motor Corp. and Nio Inc.

As part of the investigation, the EU will seek to collect evidence and testimony from all parties involved, the EU statement said.

Beijing on October 4 expressed “strong dissatisfaction” with the anti-subsidy investigation because it lacked sufficient evidence and did not comply with World Trade Organization (WTO) rules, a statement from China’s Ministry of Commerce said.

China has not been provided with full consultation documents, and the EU's request for it to participate in consultations within an "extremely short" period on the electric vehicle subsidy investigation is a serious violation of China's rights, the statement said.

Beijing also said the move would severely disrupt the global auto supply chain and have a negative impact on China-EU economic relations.

China will pay close attention to the EC's investigation procedures and will protect the rights and interests of Chinese companies, the statement said .

Minh Duc (According to Bloomberg, Reuters)

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