EU Warns Chinese EV Makers of Insufficient Information in Subsidy Probe

The European Commission warns BYD, SAIC, and Geely for not providing sufficient information in its anti-subsidy investigation. The companies may face inflated tariffs on their EU exports if they fail to comply with the Commission's demands.

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Aqsa Younas Rana
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EU Warns Chinese EV Makers of Insufficient Information in Subsidy Probe

EU Warns Chinese EV Makers of Insufficient Information in Subsidy Probe

The European Commission has issued a warning to three major Chinese electric vehicle manufacturers, BYD, SAIC, and Geely, stating that they have not provided sufficient information for its ongoing anti-subsidy investigation. The probe, launched in October 2022, aims to determine whether these companies received distortive subsidies that warrant extra tariffs on their exports to the European Union.

Why this matters: This investigation has significant implications for the global electric vehicle market, as the EU's decision could influence the competitive landscape and trade dynamics between China and Europe. A potential increase in tariffs could also impact the affordability and adoption of electric vehicles, affecting the EU's climate change mitigation efforts.

In letters dated April 23, 2023, the Commission informed the companies that they failed to provide adequate details on subsidies, operations, and supply chains. As a result, the Commission may have to rely on the concept of"facts available"to fill in the gaps, potentially leading to inflated tariffs on imported products. Trade Commissioner Valdis Dombrovskis expects the investigation to conclude"before the summer break."

The China Chamber of Commerce to the EU stated that the companies had participated in multiple rounds of questionnaires and facilitated on-site inspections. However, they viewed some of the EU's demands as excessive, including tight deadlines, requests beyond the companies' capacity to provide evidence, and demands for business-sensitive supplier information. SAIC, in a WeChat message, noted, "It is worth pointing out that commercially sensitive information, such as battery formulation, should not belong to this category."

The investigation is part of the EU's efforts to keep increasingly dominant Chinese makers of green technology at bay. Analysts believe that import tariffs of 15-30% on Chinese EVs would not significantly impact the companies' profits, and duties as high as 50% would be needed to inflict serious pain. The EU should announce its decision on provisional duties by early July 2023.

The warning comes as Chinese President Xi Jinpingembarkson his first trip to Europe in five years, with stops in France, Hungary, and Serbia. The visit is seen as an effort to rebuild China's foreign relations after a prolonged absence during the Covid-19 pandemic. Xi is due to attend talks with French President Emmanuel Macron and European Commission President Ursula von der Leyen on Monday, amid tensions over the EV probe and a Chinese anti-dumping investigation into imports of European brandy.

The European Commission's warning to BYD, SAIC, and Geely highlights the ongoing tensions between the EU and China in the electric vehicle market. As theinvestigationcontinues, the potential for inflated tariffs looms over the Chinese EV makers. The outcome of this probe will have significant implications for the future of Chinese EV exports to the EU and the broader landscape of green technology competition between the two economic powers.

Key Takeaways

  • EU warns BYD, SAIC, and Geely over insufficient info in anti-subsidy probe.
  • Probe aims to determine if Chinese EV makers received distortive subsidies.
  • EU may impose tariffs on Chinese EV imports, affecting affordability and adoption.
  • Chinese companies claim EU demands are excessive, including tight deadlines.
  • EU decision on provisional duties expected by early July 2023.