The European Union’s investigation into state-sponsored dumping in favor of Chinese manufacturers continues, with significant implications emerging as the probe progresses. Great Wall Motors, BYD, SAIC and Geely have found themselves in the crosshairs of Brussels.
The Commission plans to initiate customs registration for Chinese electric vehicle imports with immediate effect upon approval. This move would result in an immediate price hike for vehicles affected by the new tariffs if the investigation concludes that such cars are receiving unfair subsidies.
Progress of the EU Investigation
In a document published on March 6, 2024, following earlier announcements on March 4, the Commission asserts having sufficient evidence to demonstrate that Chinese electric vehicles were subsidized. This evidence led to a 14% increase in imports annually since the investigation began in October 2023.
In the official document, paragraph 42 states:
“In such investigations, the Commission found substantial state intervention in the PRC that distorts the efficient allocation of resources in line with market principles… The Commission has concluded, in particular, that in the steel sector, which provides the main raw material for the product under review, not only does a high level of state ownership persist in the PRC, but the PRC government can also interfere in price and cost determination through state presence in enterprises.”
Following these documents, the final plan will be published in the Official Journal of the EU in the coming days.
Effects on the Electric Vehicle Market
What could this decision practically entail? Firstly, a reduction in the number of accessible electric vehicles. It’s commendable to preserve the European industry, but it’s still unclear who will be affected: Chinese cars from Chinese manufacturers, or Chinese cars from European brands, considering Geely’s control of Volvo.
Regardless, the Chinese Chamber of Commerce in the EU expressed disappointment, stating that the increase in Chinese auto imports is not due to dumping but to the general rise in European demand for electric vehicles.
Currently, BYD and SAIC, through MG, offer some of the most affordable electric cars across Europe. However, tariffs could disadvantage them just as viable European alternatives like the new Renault 5 E-Tech are emerging.
