The European Union (EU) is considering including non-Chinese brands of electric cars, such as Tesla and BMW, in its ongoing subsidy investigation on China. The EU initiated the probe after discovering significant distortions in the European market, where domestically produced vehicles face competition from cheaper Chinese offerings. The investigation’s scope is still to be determined, but European officials believe that the share of China-made cars sold in Europe has already reached 8% this year and could rise to 15% by 2025. Additionally, the EU logged a trade deficit of nearly 400 billion euros with China in 2022, prompting the bloc to de-risk from China and reduce certain dependencies.
Executive Vice President of the European Commission, Valdis Dombrovskis, traveled to China to hold discussions with Chinese authorities in Shanghai and Beijing. Chinese officials raised concerns about the EU investigation multiple times during his visit. Dombrovskis assured them that the investigation follows established anti-subsidy procedures in compliance with EU and World Trade Organization principles. He emphasized the facts-based nature of the investigation and reiterated that there will be ample opportunity for engagement with Chinese authorities. Dombrovskis also acknowledged the difficult geopolitics between the EU and China, urging both parties to choose a path of mutually beneficial relations based on open, fair trade and investment.
The EU’s investigation into subsidies for electric vehicles in China is part of its efforts to address market distortions and protect its domestic industry. Although the investigation’s scope has yet to be determined, the possibility of including non-Chinese brands like Tesla and BMW indicates the EU’s interest in ensuring fair competition. Chinese officials have criticized the probe, labeling it as a protectionist measure. However, the EU has reassured Chinese authorities that the investigation is based on facts and intends to create fairer trading practices rather than severing ties with Beijing. With the rise of China-made cars in the European market, the EU has recognized the need to de-risk from China and reduce strategic dependencies.
