The European Commission will review imposing punitive tariffs to defend European Union manufacturers against cheaper Chinese electric vehicle imports that it says benefit from state subsidies.
“Global markets are now flooded with cheaper electric cars. And their price is kept artificially low by huge state subsidies,” European Commission President Ursula von der Leyen said in an annual address to the bloc’s parliament.
Leyen noted in the address that "the Commission is launching an anti-subsidy investigation into electric vehicles coming from China. Europe is open for competition. Not for a race to the bottom."
The commission will assess whether to impose tariffs above the standard 10% EU rate for cars in the high-profile case against China, Reuters reported. The move won quick support from Manfred Weber, leader of the European People's Party, according to Politico. EU Trade Commissioner Valdis Dombrovskis also confirmed he would travel to China for trade talks.
"We're open to competition but not to unfair practices. That's why we’re launching an investigation on Chinese e-vehicles," Dombrovskis posted on X (formerly Twitter).
Battery-powered cars, including non-Chinese brands produced in China like Tesla, Renault and BMW, are part of the antisubsidy investigation, according to Reuters. That the European Commission brought the case itself, rather than in response to industry complaints, is unusual, according to the news outlet.
The Chinese Chamber of Commerce has publicly opposed the investigation, arguing that subsidies are not responsible for the competitive advantage of its EV imports. The organization urged the EU to consider Chinese EVs objectively.
The EU aims to reduce its dependency on China, the second-largest economy, for green materials and products.
Chinese EV manufacturers, including BYD, Xpeng, and Nio, are boosting imports to counteract heightened competition and slower domestic growth, Reuters reported. According to data from the China Passenger Car Association, China's car exports rose by 31% in August.
The EU noted that China's percentage of EVs sold in Europe has risen to 8%, and could increase to 15% by 2025, owing to prices that are generally 20% less expensive than EU-made models.