The Chinese electric car is on the rise in Europe. The European Commission believes that there is unfair competition, because the Chinese government supports the industry with all kinds of subsidies. That is why committee chairman Ursula von der Leyen announced an investigation today in her annual ‘State of the Union’.
“Electric vehicles are crucial for a clean economy. But worldwide markets are now flooded with cheaper Chinese electric cars,” said Von der Leyen. “The price of those cars is kept artificially low with gigantic state subsidies. This disrupts our market. Europe is open to competition. But not to a ‘race to the bottom’.”
8 percent from China
For years you hardly saw Chinese cars on European roads. In 2005, the Chinese Landwind SUV scored so poorly in crash tests that the ANWB decided it should not be on the road here.
A Chinese car is now a familiar sight. Figures from market researcher Inovev show that in 2021, 4 percent of all electric cars sold in Europe came from China and this year that has already grown to 8 percent.
According to research agency Jato Dynamics, a Chinese electric car in Germany is on average 29 percent cheaper than a non-Chinese one.
Greening versus industry protection
The EU wants that from 2035 only cars that do not emit CO2 will be sold. And the cheaper electric cars become for consumers, the easier that switch will become.
But the EU also wants the European car industry not to be squeezed out of the market by cheap Chinese competition. “Unfortunately, Europe is lagging slightly behind in the production of electric cars,” says Rabobank economist Teeuwe Mevangen. “And yes, not only environmental considerations are important, but certainly also economic considerations. You certainly see that playing a role here.”
Countries with car manufacturers in particular will be pleased with measures against Chinese cars. The German and French Economic Ministers immediately welcomed the EU investigation today. “The automotive sector is an important strategic sector for Europe and when it is threatened, it is a problem for the EU. It is an industry that employs many people,” says Mevangen.
Solar panels
The import tariff on cars from China is now 10 percent. The EU has previously taken measures because China would dump products on the European market. In 2013, extra high import tariffs were imposed on solar panels from China, of up to 65 percent.
There was division within the EU over import duties. Countries where many panels are made were often in favor of the measure. Countries that mainly import panels, such as the Netherlands, were against. The measures were abolished again in 2018.
The EU investigation into car dumping could take more than a year. If measures are taken, it may take some time. “Ultimately, if Europe wants to find a stick to beat Chinese car manufacturers with, they will find it,” Mevangen thinks. He expects that China will take countermeasures if higher import duties are imposed. And that will make it more difficult for European car manufacturers to sell cars in China.
- Von der Leyen: economic growth and sustainability can go together in the EU
- ‘Cheaper cars from China will conquer Europe’
