The European Commission announced today that is has officially launched an anti-subsidy investigation on imported electric vehicles from China, after finding that a surge in heavily subsidized EVs posed a threat to the EU’s automotive industry.
The investigation follows months of pressure from France on the Commission to initiate an anti-dumping probe against EV companies in China, although other countries such as Germany have warned that the move could spark a trade war.
EU Commission Ursula von der Leyen announced plans for the investigation last month in her State of the European Union (SOTEU) speech, in which she said that “global markets are now flooded with cheaper Chinese electric cars,” with prices that are being kept artificially low through “huge state subsidies” that are distorting the market.
The European electric vehicle market is anticipated to grow rapidly over the next several years, with regulations in place requiring a 100% reduction in CO2 emissions from new cars and vans registered in the EU from 2035, as well as a similar rule in place in the UK. Sales of all-electric vehicles currently account for approximately 13% of the EU car market.
Announcing the official launch of the investigation, von der Leyen said:
“The electric vehicle sector holds huge potential for Europe’s future competitiveness and green industrial leadership. EU car manufacturers and related sectors are already investing and innovating to fully develop this potential. Wherever we find evidence that their efforts are being impeded by market distortions and unfair competition, we will act decisively.”
In a statement announcing the formal investigation, the Commission said that while no formal complaint had been received from EU industry, sufficient evidence had been gathered indicating that “the recent surge in low-priced and subsidised imports of electric vehicles from China into the EU posed an economic threat to the EU’s electrical car industry.”
The Commission said that it will determine whether it is in the best interests of the EU to remedy the effects of the unfair trade practices based on the outcome of the investigation, which could include the imposition of anti-dumping duties on battery electric vehicles imported from China.
Valdis Dombrovskis, EU Commission Executive Vice-President and Commissioner for Trade, said:
“Electric battery vehicles are crucial for the green transition and to meet our international commitments to reduce CO2 emissions. This is why we have always welcomed global competition in this sector, which means more choice for consumers and more innovation. But competition must be fair. Imports must compete on the same terms as our own industry.”