EU Commission Finds Chinese Electric Vehicle Producers Benefit from Unfair Subsidies, Proposes Countervailing Duties Up to 38.1%

The European Commission has provisionally concluded that China’s battery electric vehicle (BEV) value chain benefits from unfair subsidies, posing a threat of economic injury to European Union (EU) BEV producers. This finding is part of an ongoing investigation that scrutinises the extent and impact of these subsidies on the EU market.

The Commission’s preliminary findings indicate that Chinese BEV manufacturers, such as BYD, Geely, and SAIC, receive substantial financial support from their government, enabling them to sell vehicles at prices that undercut European competitors. The investigation also considered the potential repercussions of countervailing measures on various stakeholders, including importers, users, and consumers within the EU.

In response to these findings, the Commission has initiated discussions with Chinese authorities to seek a resolution that aligns with World Trade Organization (WTO) rules. As a precautionary measure, the Commission has pre-disclosed the provisional countervailing duties it may impose on Chinese BEV imports if no satisfactory agreement is reached. These duties, effective from July 4, would initially be guaranteed by customs authorities in each EU Member State and collected only if definitive duties are later confirmed.

The proposed duties for specific Chinese BEV producers are as follows:

  • BYD: 17.4%
  • Geely: 20%
  • SAIC: 38.1%

 

Other cooperating Chinese BEV producers would face a weighted average duty of 21%, while non-cooperating producers would incur a residual duty of 38.1%.

13 months. The Commission plans to publish provisional countervailing duties by July 4, with definitive measures to be decided within four months thereafter. The process also allows for individualised duty rates, with Tesla potentially receiving a unique rate upon request.

Interested parties, including EU producers, importers, exporters, and their associations, as well as Chinese producers and their representatives, have been informed of the intended provisional duty levels. Detailed information is accessible on the Commission’s website, ensuring transparency and compliance with the EU’s basic anti-subsidy regulation.

Chinese producers that have been sampled received specific details about their calculations and are invited to provide feedback. Any substantiated comments could lead to a revision of the Commission’s calculations in accordance with EU law.

Reactions to the news have been varied. Simone Tagliapietra, Senior Fellow at Bruegel. Professor of EU climate and energy policy at The Johns Hopkins University noted on LinkedIn that whilst the EU was committed to use all trade tools available to safeguard fair competition, strong industrial policy was needed in in order to mitigate increasing pressure from China.

Tagliapietra’s sentiments were echoed by many from the public and private sectors. Julia Polisacnova, Senior Director, Electric Vehicles & Batteries at Transport & Environment for one, stated: “The EU GreenDeal came with the promise of growth and jobs, and that’s not possible if our green products are all imported. The tariffs are welcome but won’t be enough to localise EV and battery manufacturing.” Likewise, ACEA Director General Sigrid de Vries went further, noting that “What the European automotive sector needs above all else to be globally competitive is a robust industrial strategy for electromobility. This means ensuring access to critical materials and affordable energy, a coherent regulatory framework, sufficient charging and hydrogen refilling infrastructure, market incentives, and so much more.”

Meanwhile, European Automotive Market Analyst Matthias Schmidt explained that “A weighted average 21% landing zone sounds like a calculated move to please both sides and get member states to pass this.” Schmidt added that he and his colleagues did not “expect much movement in pricing from models from China that can likely absorb a large proportion of this into their inflated profit margins in Europe” and noted that the lack of brand equity in the EU meant that Chinese models would unlikely be able to pass on additional costs to consumers.

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