Will the EU Commission be able to stop Chinese electric cars?
The European Commission has launched an anti-subsidy investigation into electric cars coming from China and sold at low cost. Europe risks losing a key industry
“Global markets are flooded with affordable electric cars right now. And their price is kept artificially low by huge state subsidies.” The President of the European Commission, Ursula von der Leyen, said this in her State of the Union speech to Parliament.
The Commission today launched an anti-subsidy investigation to decide whether to impose duties on imports of electric cars from China: the country is the largest producer of these vehicles, with a share of 54 percent of the world total, and Chinese companies can have long benefited from generous state subsidies.
WILL CHINESE ELECTRIC CARS CONQUER EUROPE?
European automakers cannot produce electric vehicles at the same cost as Chinese brands like BYD, Nio and Xpeng. The risk, then, is that Chinese low-cost models will conquer large market shares in Europe, sending a very important industry for the Old Continent into crisis.
If von der Leyen spoke of "cheap" electric cars it is because Chinese brands are actually cutting their selling prices. In China there is intense competition between different companies, but the domestic market no longer guarantees large growth rates: for this reason Chinese companies are increasingly turning abroad.
This is a "traditional" approach, in a certain sense, of the Chinese industry: when a situation of internal overcapacity occurs, it compensates with exports at reduced prices. Much the same thing happened with photovoltaic devices.
THE DATA
According to data from the China Passenger Car Association, China's automotive exports grew by 31 percent in August. According to Inovev, 8 percent of new electric cars sold in Europe this year are Chinese-made; in 2022 they were 6 percent and in 2021 they were 4 percent.
CHINA'S COST ADVANTAGE
Last April the founder of Nio, one of the most important Chinese brands , said that Chinese electric car manufacturers have a cost advantage of about 20 percent over Western competition. This is thanks to China's dominance of the supply chain: the country is clearly the largest refiner of critical metals (lithium, nickel, cobalt…) and the leading producer of batteries and various components (anodes, cathodes, electrolytes…).
WHAT THE EUROPEAN UNION RISKS
Electric mobility is an important piece of the European Commission's plan for the ecological transition: Brussels, moreover, has decided to ban, from 2035, the registration of vehicles powered by petrol or diesel on the territory of the Union. If the automotive sector were to lose the industrial electric challenge with China, the economic and employment consequences could be very serious.
“Europe,” explained von der Leyen, “is open to competition, not to a race to the bottom.”
– Read also: All the risks of Chinese electric cars
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/indagine-ue-sussidi-auto-elettriche-cina/ on Wed, 13 Sep 2023 13:13:29 +0000.