The European Commission has officially launched a probe into Chinese electric vehicles for potential subsidies. This was announced in a notice published in the EU Official Journal.
The Commission has launched a probe on its own accord, known as an ex-officio investigation, rather than in response to a formal complaint from the EU industry, as is typical. The investigation was announced by Commission President Ursula von der Leyen during her State of the European Union address last month, in which she cautioned about the influx of lower-priced Chinese electric cars into global markets.
After facing pressure from the French government, an investigation was launched in order to bolster Europe’s industrial defenses against the rapidly expanding electric vehicle industry in China. However, this has caused worry in Germany, as their automotive industry is heavily reliant on the Chinese market. There are concerns that Beijing may retaliate, leading to a back-and-forth cycle that could potentially escalate into a large-scale trade conflict.
The notification marks the initial formality in the investigation. The European Commission will look into the entry of newly manufactured electric cars, powered by batteries, from China, regardless of their brand origin (Chinese or European). These investigations are launched when there is suspicion of foreign countries providing subsidies that disadvantage the European industry – a belief held by the EU executive.
The Commission will now solicit responses from the Chinese government and the relevant companies.
The Chinese commerce ministry criticized the EU in their initial public statement, stating that the EU’s request for immediate participation in consultations was a violation of their rights. Beijing also expressed dissatisfaction with the lack of sufficient consultation materials provided.
The Commission will need to provide evidence in the investigation to determine if car exporters received subsidies from the Chinese government within a certain period of time and if these subsidies had negative effects on the European industry.
The countdown officially starts now. Temporary fees must be enforced within nine months, while permanent fees must be activated no later than 13 months after the investigation begins.