The European Commission has initiated an investigation into Chinese electric vehicle (EV) imports, examining whether punitive tariffs should be imposed to protect European producers. The investigation aims to address the influx of cheaper Chinese EVs in global markets, which the EU believes are benefiting from state subsidies. The probe, which covers battery-powered cars from China including non-Chinese brands like Tesla, Renault, and BMW, marks a significant case against China for the EU. Tensions between China and the EU have been increasing, and the EU is seeking to reduce its reliance on China for its green transition.
European carmakers are grappling with the challenge of producing lower-cost electric vehicles and competing with China’s lead in the EV market. China’s share of EVs sold in Europe has risen to 8% and is projected to reach 15% by 2025. Shares of Chinese EV producers fell following the EU announcement, while shares of European carmakers experienced mixed reactions. The investigation will examine a range of unfair subsidies, including prices of raw materials and batteries, as well as preferential lending and provision of land.