Europe has initiated an investigation into subsidies provided by the Chinese government for electric vehicle (EV) manufacturers. The investigation specifically focuses on subsidies for EV production and will be conducted in a “fact-based” manner, according to Valdis Dombrovskis, the executive vice president and trade commissioner of the European Commission. Dombrovskis emphasized that the outcome of the investigation cannot be pre-judged and will be determined by the evidence gathered. The investigation will adhere to the rules of the European Union (EU) and the World Trade Organization (WTO), and will involve engagement with Chinese authorities and businesses.
China’s electric car exports have surged in recent months, surpassing Germany’s and on track to surpass Japan’s as the largest car exporter globally. However, European auto giants like Volkswagen have struggled to penetrate the highly competitive Chinese electric car market. The EU’s subsidy probe aims to address concerns about the “risk of injury” to the European auto industry and the growing market share of Chinese EV brands in the EU market. The investigation holds significant consequences for businesses, particularly as the EU plans to phase out sales of internal combustion engine cars by 2035.
China’s Ministry of Commerce has criticized the EU investigation, calling it a “blatantly protectionist act” that would distort the global auto industry. Despite criticism, the investigation reflects the EU’s efforts to regulate subsidies and create a level playing field in the electric car market. Dombrovskis highlighted that the issue was raised in nearly every meeting with Chinese counterparts during his trip to China. Overall, the investigation seeks to ensure fair competition and safeguard the European auto industry in the rapidly growing EV market.
