EU Launches Second Part of China EV Subsidy Probe to Protect Auto Industry
The EU has launched a second part of a three-part investigation into Chinese electric vehicle subsidies. This move does not imply a final decision but aims to ensure China's subsidy policies are reasonable and comparable to EU ones. The inquiry could potentially slow down Chinese car companies' expansion in Europe.
Manufacturing vehicles similar to the BYD Han in Europe would incur higher costs than producing them in China, even after accounting for shipping costs and tariffs. This investigation is part of the EU's effort to protect its automotive industry, which is crucial for the next two to three years as European companies race to compete with Chinese new energy vehicles.
The EU's inquiry seeks to clarify the status and intensity of Chinese EV subsidies in various countries. It follows a trend of anti-subsidy investigations targeting specific countries or industries during major price distortions in competition. Legal experts consider such measures a regular trade policy tool.
In Germany, subsidies for new energy vehicles have been granted mainly by the federal government through programs like the Umweltbonus. These subsidies, jointly financed by the BMWK and the automotive industry, have reached several billion euros to promote electromobility and climate targets. Meanwhile, China's new energy car subsidies have been decreasing since 2018, leading to a decrease in sales in 2019.
The EU's anti-subsidy inquiry against Chinese electric vehicles is a strategic move to protect its automotive industry and ensure fair competition. The investigation allows room for defense and aims to clarify the status of Chinese EV subsidies. In the coming years, this could slow down Chinese car companies' market expansion in Europe, giving European companies time to accelerate their progress and compete with their Chinese counterparts.
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