European Union launches anti-subsidy probe into Chinese EVs

The European Commission, the manager arm of the European Union, on Wednesday launched an investigation into subsidies given to electrical car makers in China, in accordance with President Ursula von der Leyen.

Speaking at her annual State of the Union handle on the European Parliament in Strasbourg, she confirmed the probe, saying: “Europe is open to competitors however not for a race to the underside.”

The surprising announcement marks yet one more bump in the road for EU-China relations and comes after the U.S. and Europe agreed in late May to scale back their dependency on Beijing — reasonably than utterly slicing ties.

Autos shares in Europe have been flat throughout morning offers, erasing features of over 1% in a largely down day for many sectors.

“We need to be clear-eyed in regards to the dangers we face,” von der Leyen mentioned to a full home of lawmakers.

“Take the electrical car sector, it’s a essential trade for the clear economic system with an enormous potential in Europe, however world markets are actually flooded with cheaper Chinese electrical automobiles and their costs are stored artificially low by big state subsidies.”

“This is distorting our market and as we don’t settle for this distortion from inside our market, we don’t settle for this from the surface,” she added.

The fee says an anti-subsidy investigation should impose any measures inside 13 months from initiation. It says that provisional measures have to be imposed no later than 9 months, adopted by 4 months to impose definitive measures if legally warranted.

Von der Leyen drew comparability to the impression on Europe’s photo voltaic trade and what might occur to the area’s automotive trade, each of which have confronted strong competitors from Chinese firms.

Europe’s greatest automotive producers said earlier this month that they have been cautious in regards to the aggressive menace posed by new Chinese firms as the auto trade strikes towards electrification.

Among the auto executives to acknowledge the problem from China on the IAA Mobility convention in Germany, Volkswagen CEO Oliver Blume mentioned the corporate had established a brand new China technique this 12 months to concentrate on creating applied sciences to cater particularly to Chinese demand.

— CNBC’s Silvia Amaro contributed to this report.