Much more so than Australia, the European market has seen an inflow of electrical vehicles from China – and the European Fee needs to do one thing about it.

The President of the manager department of the European Union, Ursula von der Leyen, has introduced the launch of an anti-subsidy investigation.

“International markets at the moment are flooded with cheaper Chinese language electrical vehicles. And their worth is saved artificially low by big state subsidies,” mentioned President von der Leyen in her annual speech to the European Parliament on Wednesday.

“That is distorting our market. And as we don’t settle for this from the within, we don’t settle for this from the surface.

“So I can announce in the present day that the Fee is launching an anti-subsidy investigation into electrical automobiles coming from China.

“Europe is open for competitors. Not for a race to the underside. We should defend ourselves in opposition to unfair practices.”

The President known as for “open traces of communication and dialogue with China” and mentioned she wished to “de-risk, not decouple”.

However, the Chinese language authorities has already responded, releasing an announcement criticising the probe.

“[The investigation] is a unadorned protectionist act that may critically disrupt and warp the worldwide automotive business and provide chain, together with the EU, and can have a damaging impression on China-EU financial and commerce relations,” China’s Ministry of Commerce mentioned in an announcement.

“China pays shut consideration to the EU’s protectionist tendencies and follow-up actions, and firmly safeguard the authentic rights and pursuits of Chinese language firms.”

The secretary common of the China Passenger Automotive Affiliation, Cui Dongshu, mentioned the worth of Chinese language-made vehicles exported to Europe is mostly virtually double what they promote for in China.

The organisation says EV exports are booming not due to subsidies from the Chinese language authorities, however due to a extremely aggressive provide chain.

However EU officers imagine Chinese language manufacturers are undercutting European-built EVs by round 20 per cent within the European market.

The European Fee mentioned China’s share of the EV market in Europe has risen to eight per cent and will attain 15 % in 2025.

The annual China-EU summit is going down later this yr, and there ought to definitely be some energetic dialogue on electrical automobile pricing.

The probe was reportedly initiated by the European fee, and never from a particular business criticism – though figures like Stellantis CEO Carlos Tavares have been vocal in regards to the menace posed by Chinese language manufacturers.

Bloomberg experiences the probe may take as much as 9 months and result in tariffs near the 27.5 per cent stage imposed on Chinese language EVs by the U.S.

Hefty tariffs within the U.S. have saved Chinese language manufacturers away from one of many world’s largest new automobile markets, with solely a handful of Chinese language-made fashions supplied there – and main gamers like SAIC Motor, proprietor of MG, not getting into the market.

In distinction, MG is the best-selling Chinese language model in Europe. Within the first half of 2023, it outsold manufacturers like Cupra, Mazda and Jeep in keeping with knowledge from JATO Dynamics.

The brand new, inexpensive MG 4 electrical hatchback helped it to spice up volumes by 128 per cent in contrast with the primary half of 2022.

BYD can be increasing quickly, whereas different manufacturers like Nio, HiPhi, Hongqi, XPeng and GWM’s Ora have entered the EV market there, with Leapmotor and Geely’s Zeekr additionally asserting launches.

Business analysts have speculated the probe may cease extra Chinese language manufacturers from getting into the market and for present manufacturers to gradual their growth, which might be a boon for European manufacturers have been it not for the potential menace of countermeasures from China.

That has the potential to rattle main European automakers just like the Volkswagen Group, which have a big presence within the Chinese language market. Bloomberg additionally notes round a 3rd of BMW’s earnings earlier than curiosity and tax come from China.

President von der Leyen particularly cited the inflow of photo voltaic firms from China, and warned she didn’t wish to see a repeat of this.

“We’ve got not forgotten how China’s unfair commerce practices affected our photo voltaic business,” she mentioned.

“Many younger companies have been pushed out by closely subsidised Chinese language rivals.”