What’s the Real Reason Behind EU’s Deep Dive into Chinese Electric Car Brands?

An investigation into Chinese electric car manufacturers by the European Commission heightens tension between China and the EU. Brands such as BYD, Geely, and SAIC are currently under close scrutiny.

Chinese Brands Under Investigation

The European Commission launched a thorough investigation into Chinese electric car manufacturers in October, expected to last 13 months. Specifically, popular brands like BYD, Geely, and SAIC are under the microscope. Interestingly, international brands such as , Renault, and BMW are not included in this investigation. This focus centers on vehicles sold in , unlike European or American brands manufactured in China.

Alleged Unfair Benefits

The main focus is to ascertain if these Chinese electric vehicles unfairly benefit from state subsidies, thereby giving them a competitive edge in the market. An interesting fact is that Chinese electric vehicles make up approximately 8% of the EU market, a number that could rise to 15% by 2025 due to their lower prices (-20% approximately) compared to European models.

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A Response from China and the Brands Involved

China has reacted to this investigation by launching a similar “anti-dumping” investigation on cognac imported from EU. Manufacturers like BYD, Nio, and Xpeng have ramped up their efforts to penetrate the European market. However, the European Commission, BYD, SAIC, and China's Ministry of Commerce are yet to comment on this ongoing investigation. The only response has come from Geely, reaffirming its respect for laws as well as its support for fair competition.

The Larger Implications

The car industry adds yet another layer to the existing geopolitical challenges in China-EU relations. It further intensifies the EU's intention to diversify its trading partners. This investigation could lead to possible punitive tariffs aimed at protecting European car brands. France, in particular, has already modified its eco-bonus scheme to favor French or European companies.

Upcoming Inspections

In the coming weeks, inspections will be carried out at BYD, Geely, and SAIC. EU inspectors are already in China, planning visits to manufacturers this month and next.

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