Félix CerezoSpecial envoy Kuusamo (Finland)

Special Envoy Kuusamo (Finland)

Updated Thursday, March 7, 2024-08:54

  • Economy Brussels announces an investigation into Chinese subsidies for electric cars

  • Research The danger of the boomerang effect

The

European Commission

has assured that it has evidence that the Chinese government is subsidizing electric vehicles exported to Europe through

"direct transfer of funds"

and other mechanisms.

The information has been revealed by the Bloomberg and Reuters agencies.

The commission is in the middle of an investigation into whether electric vehicles made in China are unfairly

subsidized

.

Possible solutions could include tariffs to protect EU producers.

The investigation should conclude in November, although the EU could impose

provisional tariffs in July

.

The commission said it would begin

customs registrations

of imports of Chinese electric vehicles on Thursday, meaning they could be hit with retroactive tariffs from then on if the EU trade investigation later concludes they are receiving unfair subsidies.

The EU China Chamber of Commerce said it was disappointed by the move and that the increase in imports reflected growing European demand for electric vehicles.

On Tuesday, the commission published a document that said it had sufficient evidence tending to show that Chinese electric vehicles were being subsidized and that

imports had increased 14% year-on-year

since the investigation formally began in October.

The commission said it could not estimate the amount of possible retroactive tariffs.

Chinese automakers,

including BYD and SAIC's MG

, are targeting Europe with a range of competitively priced electric vehicles, putting pressure on mass-market manufacturers such as

Stellantis

and

the Volkswagen Group

.

BYD, which overtook Tesla as the world's largest maker of electrified vehicles last year, said in December it will build a car factory in Hungary to boost sales in Europe.

The EU tests

The commission said it had evidence showing that EU imports are being subsidized, although it did not list specific cases.

Those subsidies include:

* Direct transfer of funds and possible direct transfers of liabilities and funds

* Public revenue "forgiven or not collected"

* Government supplies of goods or services "for less than adequate remuneration"

The commission assured that China's exports constituted

"critical circumstances" through "massive imports in a relatively short time

. "

There were 177,839 imports from October 2023 to January 2024, an increase of 11% compared to the investigation period of October 2022 to September 2023.

Imports rose 14% year-on-year in the October-January period, the commission said.

If Chinese imports continue at the current rate, the commission said, EU carmakers could face

declining sales and reduced production levels

.

That could "adversely affect employment and overall production of union producers," the commission said.

In recent investigations in other sectors, such as electric bicycles and fiber optic cables, the EU found

subsidy margins ranging between 4 and 17%

.

The investigation is part of a

broader EU effort to protect supply lines

and bring production closer to home, particularly in key sectors such as semiconductors and pharmaceuticals.

The announcement tested already fragile relations with Beijing, which subsequently launched its own

anti-dumping

investigation into brandy imported from the EU, a move seen as retaliation against France, which supported the investigation into electric vehicles.