EU’s Subsidy Probe Expands: Non-Chinese EV Makers like Tesla under the Spotlight

Infotrading.io - In an unprecedented twist, non-Chinese electric vehicle (EV) makers, including industry giants like Tesla and BMW, find themselves under the microscope as the European Union intensifies its subsidy probe into China. Executive Vice President of the European Commission, Valdis Dombrovskis, disclosed to CNBC that the ongoing investigation's scope, initiated earlier this month, remains under determination.

Executive Vice President and European Commissioner for Trade Valdis Dombrovskis.

The probe roots from the EU’s concerns over potential market distortions and the overwhelming competition from lower-priced products emerging from China. The EU's quest is to examine subsidies provided by China to EV manufacturers, after identifying considerable market distortions where locally produced vehicles are challenged by more economical Chinese counterparts.

In response to this exploration, Beijing authorities have expressed their dissatisfaction, labeling the actions as “protectionist.” This EU investigation is slated to stretch for up to 13 months and could shape the future of international trade, market dynamics, and diplomatic relations between China and the European Union.

European officials have observed an increase in the sale of China-made cars into Europe, foreseeing the current 8% share to escalate to 15% by 2025. The EU recorded a trade deficit of nearly 400 billion euros with China in 2022, prompting the bloc to mitigate risk and strategize on minimizing strategic dependencies on select strategic products.

Valdis Dombrovskis emphasized that the choice before them is either to cultivate mutually beneficial relations based on fair trade and investment or to select a path diverging the two entities, leading to reduced opportunities and weakening shared benefits enjoyed over the decades.