The European Union (EU) is launching an investigation on Chinese electric vehicle (EV) subsidies and the possibility of tariffs starting next year due to its low price. The global market is flooded by cheap Chinese EV as the manufacturer usually gets subsidies due to China’s status as a developing country, and also green subsidies on EV from Chinese government and end-user countries as well.
Most countries believe EV is an eco-friendly way to reduce carbon emission and solve climate change, hence the subsidies and EU’s target to ban combustion engine cars by 2035.
Earlier this year, France warned about the influx of Chinese EV in the European market and currently its ministry of finance is working on cutting subsidies and also pushing Germany to launch an industry protection measure as well.
Recently, Chinese EV makers have been trying to expand their market especially in the EU as China’s economy is currently not doing well, thus the low domestic demand but relatively higher in foreign markets. The top Chinese brand, BYD has dethroned Volkswagen around 15 countries in Europe, according to Yahoo finance and Bloomberg.
The EU’s executive arm is probing this issue despite retaliation concerns from China. After this announcement, Chinese EV stocks such as BYD and XPeng fell by at least 2%, while the European’s Stoxx 600 Automobiles & Parts Index gained more than 2% since July. Renault SA and Volkswagen AG, the related EU car brands also were up by at least 2.5% each.
