The European Commission has taken a decisive step by launching an anti-subsidy investigation into the import of electric vehicles (EVs) from the Chinese mainland. This move, announced by European Commission President Ursula von der Leyen, aims to address concerns that Chinese EVs are being sold in the European Union at artificially low prices due to substantial state subsidies.
Anti-subsidy investigations are not new to the EU. In recent years, the union has initiated similar probes against a range of Chinese products, including cell phones, photovoltaic equipment, commercial aircraft, and home appliances. The primary allegation is that these products benefit from significant state support, thereby distorting the EU market and disadvantaging local industries.
However, the narrative is more nuanced. The government of the Chinese mainland ceased providing subsidies to EV buyers at the end of 2022. Despite this, EU countries continue to offer various subsidies for electric vehicles, such as tax benefits and purchase incentives. These comprehensive subsidies range from €3,000 to €9,000 per electric car across different EU member states. Additionally, the United States has amplified its support for the EV industry through the Inflation Reduction Act, allocating $369 billion to boost the sector, including $7,500 in incentives for motorists.
The surge in Chinese EV exports to Europe is a testament to the resilience and competitive edge of Chinese automakers. According to the China Association of Automobile Manufacturers, the market share of Chinese EVs in Europe has climbed from 3% in 2020 to 8% in 2023, with projections to reach 15% by 2025. In the first seven months of 2023 alone, exports of Chinese EVs to Europe reached 230,000 units and continue to grow.
Research from HSBC in the UK highlights that the dominance of Chinese EVs in the European market is driven more by manufacturing capacity than by price competition alone. The Chinese mainland's ability to rapidly innovate and expand its product lines, along with swift updates to vehicle models, has positioned its EVs as formidable competitors. While fuel cars in the EU typically see updates every seven years, Chinese EVs are refreshed every 1-2 years, keeping pace with evolving market demands and technological advancements.
Contrary to the perception of a price-driven strategy, Chinese automakers are committed to maintaining the quality and reputation of their vehicles in Europe. They have no plans to engage in a price war, as lowering prices could risk branding their products as low-quality and inexpensive, which does not align with their long-term market positioning.
Reference(s):
cgtn.com
