EU investigates Chinese electric vehicles

The European Union's (EU) investigation into subsidies for Chinese-made electric vehicles exported to Europe could do more harm than good, BMW Chief Financial Officer (CFO) Walter Mertl said, warning of a possible backlash from Beijing.

The chief financial officer of Germany's top carmaker said he did not support punitive tariffs, arguing that the investigation would protect units without significant sales in China while impacting every automaker doing business in the world's largest car market.

“The backlash, like a boomerang, could be bigger than people imagine,” he said, referring to China’s potential retaliation against European automakers.

China is the largest market for Germany's top three automakers, Volkswagen, BMW and Mercedes-Benz.

BMW is exporting its all-electric iX3 to Europe from China, and will start exporting its Mini next year. That leaves the German car giant vulnerable to potential additional EU tariffs on Chinese imports, as well as any backlash from China when it comes to its sales in the country.

While 90 percent of BMW cars sold in China are produced locally, some materials are shipped to China from Europe, Mr. Mertl said.

World - BMW: — The iX3 is BMW's first all-electric model to be produced in China for global markets, including Europe. Photo: Performance Drive

China has condemned the EU investigation, which officially began on October 5, as inconsistent with World Trade Organization (WTO) rules and detrimental to global growth in electric vehicle sales.

Speaking ahead of BMW’s third-quarter results announcement early next month, Mertl said BMW would likely post “good numbers” in line with its upgraded forecast for pre-tax and interest margins of 9-10.5%.

BMW previously reported a significant increase in sales in the second quarter, up 11.3%. In China, the company sold a total of 197,807 BMW and MINI vehicles in the second quarter, which was 16.2% higher than the same period last year.

The figures in the US and European markets in the second quarter were 95,533 vehicles, up 13.7% and 232,706 vehicles, up 9.0%, respectively.

Asked whether the luxury automaker is seeing a slowdown in demand for electric vehicles, as Volkswagen has reported in recent weeks, BMW’s CFO said that electric vehicle sales are growing and the company is on track to meet its target of 15% pure electric vehicle sales for the year.

Some supply chain issues in the logistics and transportation sector remain and may continue for the next six months, he added.

Minh Duc (According to Reuters, BMW website)

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