Foreign brands including Tesla to face scrutiny as part of EU probe into China car subsidies. Tesla and European carmakers that export from China to the EU are set to come under scrutiny as the bloc probes whether the country’s electric vehicles industry is receiving unfair subsidies, said Brussels’ most senior trade official.
Elon Musk’s Shanghai-built Tesla EVs scrutiny in EU probe into Chinese state subsidies to avoid ‘a race to the bottom’. EU executive vice-president Valdis Dombrovskis on Tuesday said there was “sufficient prima facie evidence” to justify the EU probe into imports from China of battery-powered vehicles including Tesla, which Brussels fears could overwhelm the bloc’s car industry.
Valdis Dombrovskis on EU probe
“Strictly speaking, it’s not limited only to Chinese brand electrical vehicles, it can be also other producers’ vehicles if they are receiving production-side subsidies,” said Dombrovskis in an interview, responding to a question on whether Tesla or Geely, the owner of Sweden’s Volvo, might fall under the probe.
He said he was constantly pressed by his Chinese counterparts about the EU probe.
For Beijing, the EU’s probe announcement this month of the anti-subsidy investigation days before Dombrovskis’s visit opened a new front in recent tensions between the two trading superpowers.
The EU was “open to competition” in the EV sector, but “competition needs to be fair”, said Dombrovskis, adding that other large economies had already introduced tariffs on battery EVs from China.
“The EU is now probably the largest market which is open for Chinese producers,” he said.
Tesla facing scrutiny
Now Tesla, the world’s largest EV maker largely thanks to its factory in Shanghai, could be facing scrutiny. It has accepted state subsidies from China that are large enough to have distorted the competitive playing field. Elon Musk’s company may face punitive tariffs that render exports to the EU from its flagship plant economically unviable.
China also pledged to prioritize resolving problems such as a backlog in approving licenses for European infant formula makers and barriers to imports of luxury goods.
But Beijing also made clear its displeasure with the anti-subsidy probe. Dombrovskis said his counterparts raised the matter in every meeting.
China’s EV market
Chinese commerce minister Wang Wentao told Dombrovskis on Sunday the rapid development of China’s EV sector had been the result of research and development innovation, free competition and a “complete industry system”.
“Wang Wentao expressed serious concern and strong dissatisfaction that the EU would initiate an anti-subsidy investigation into Chinese electric vehicles,” the commerce ministry said on Tuesday. Accusing Brussels of “protectionism” that would affect environmental co-operation and the stability of global automotive supply chains.
Tesla Shangai factory
Tesla already exports electric cars to Europe from its Shanghai gigafactory. Although those numbers might fall following the opening of a facility in Berlin last year, said analysts. About one-fifth of all EVs sold in Europe are manufactured in China.
China’s law problem for foreign businesses
In the first half of this year, Chinese-made vehicles accounted for 11.2 per cent of EVs sold in Germany. This was according to a brief by the Center for Strategic and International Studies this month.
About 91 per cent of those cars were from Chinese-owned European brands such as Britain’s MG, owned by China’s SAIC, or Volvo’s Polestar, or from joint ventures between European and Chinese companies such as Dacia Spring, Smart or BMW iX3, said the CSIS.
Dombrovskis also emphasized that new Chinese data laws were a “systemic problem” for foreign businesses operating in the country. European companies have complained that the laws, which require groups to store data locally, are vague and cumbersome to observe.
