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EV makers like Tesla could fall under Europe’s probe into China

by Mark Mendoza

The European Union (EU) has initiated an investigation into subsidies provided by China to electric vehicle (EV) makers. This probe comes in response to evidence suggesting significant distortions in the European market due to cheaper offerings of Chinese-made EVs. While the investigation is primarily focused on Chinese brands, there is a possibility that non-Chinese brands, including Tesla and BMW, could also be examined.

Valdis Dombrovskis, Executive Vice President of the European Commission, clarified that the scope of the investigation is still to be determined. He emphasized that the investigation does not only cover Chinese brand EVs. Dombrovskis stated that they are currently engaging in pre-initiation consultations with Chinese authorities to finalize the scope of the investigation.

The EU’s decision to investigate China’s subsidies has drawn criticism from Beijing, which claims that it reflects protectionism. However, European officials believe that there are legitimate concerns regarding the distortions caused by Chinese-made EVs in the European market. It is estimated that the share of China-made cars sold in Europe could reach 15% by 2025, up from 8% this year.

The investigation could last up to 13 months, and it is seen as part of the EU’s broader strategy to reduce dependencies on China. European officials have expressed a desire for fair and open trade, while also seeking to minimize strategic dependencies on certain products.

Dombrovskis traveled to China to discuss the investigation with Chinese authorities. During his visit, he assured them that the probe is based on facts and will comply with EU and World Trade Organization (WTO) principles. He emphasized that there will be ample opportunity for engagement with Chinese authorities throughout the investigation process.

The EU’s approach to China is being shaped by the geopolitical context and concerns over trade deficits. European officials are wary of a path that could lead to reduced opportunities and weakened economic benefits. They seek a mutually beneficial relationship based on fair trade and investment, while maintaining open strategic autonomy.

Overall, the EU’s investigation into subsidies for EV makers is a significant development in the ongoing trade tensions between China and Europe. It reflects concerns about market distortions and aims to ensure fairer trading practices. The outcome of the investigation and any subsequent actions taken by the EU could have implications for the future of the EV industry and trade relations between Europe and China.

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