Brussels is preparing to open a massive investigation into China for its alleged state aid in the electric car sector, a crucial element of the green transition that the European Union has embarked on both to meet its climate objectives and to avoid the deindustrialization of the continent.
“Global markets are being flooded with cheaper Chinese cars whose price is kept artificially low thanks to huge public subsidies. That is distorting our market,” denounced yesterday the president of the European Commission, Ursula von der Leyen, during her speech on the state of the Union before the plenary session of the European Chamber. “I can announce that the Commission is going to launch an investigation into state aid for electric vehicles from China,” Von der Leyen revealed.
“Our companies are too often excluded from foreign markets, are victims of predatory practices or are weakened by competitors who benefit from large state subsidies. “We neither accept them inside nor do we accept them outside,” argued the German, who received a resounding ovation from the MEPs when announcing the decision.
The electric car sector “is crucial for the clean economy industry and has enormous potential for Europe” but “we must keep our eyes wide open to the risks we face,” argued Von der Leyen. Several member states – especially France – have long been insisting that Brussels analyze the situation in this market and take action, concerned about the impact of Chinese public aid to the sector and its effects on global competition. But the European Commission acts ex officio, not because it has received a prior complaint about possible unfair competition practices, community sources explained. Community services have collected information about the sector and are suspicious of state subsidies for the materials used to manufacture batteries, a determining element for the final price of an electric vehicle, and the software used by cars.
Beijing was aware of Brussels’ concerns. Von der Leyen conveyed his concerns about the issue to Chinese Prime Minister Li Qiang during the last G-20 summit in New Delhi. The issue will undoubtedly feature on the agenda of the high-level EU-China trade meeting scheduled for September 25. Vice President Valdis Dombrovskis, responsible for the Competition portfolio, confirmed yesterday that he will travel to China in the coming days. “We are open to competition but not to unfair practices, that is why we are going to open an investigation into Chinese electric vehicles,” he tweeted shortly after the president of the community executive’s speech.
Although the percentage of electric cars manufactured in China is currently minimal, its market share is growing at high speed and has gone from 0.1% in 2019 to 2.8% so far this year, according to a recent analysis published by Schmidt Automotive Research. It is also a sector that is making giant strides: 13.6% of new registrations in the EU last July corresponded to electric cars, compared to 9.8% the previous year, according to the European Automobile Manufacturers Association (ACEA), which registered a growth of 10% in the case of Spain.
The investigation into state aid to China in the automobile sector is the largest competition file opened by the EU to China since the case of state aid to solar panels opened in 2012, which finally ended with an agreement that set a minimum price for its exports to the EU and a maximum annual volume for the European market for several years, to leave room for the community industry to grow and facilitate the green transition.
