Given the size of the market and its rapid growth, potential tariffs from the probe could have a far bigger impact than any previous anti-subsidy actions against Chinese imports.
Made without a complaint from the auto industry, the step is aimed at preventing a replay of what happened to Europe’s solar industry a decade ago, when local manufacturers failed to keep up with state-backed Chinese rivals. The share of Chinese brands of electric vehicles in the bloc was 8% last year, according to an EU official. With Chinese models about 20% cheaper than domestic offerings, the expectation is that they will control 15% by 2025, the official said.
The EV probe against China is part of a broader EU effort to “de-risk” the relationship without “de-coupling.” This has played in out in several areas, including restricting sales of high-end semiconductors and implementing export controls related to quantum computing and artificial intelligence. The bloc has also put in place new instruments to address China’s coercive practices.
While many of China’s upstart companies have yet to consistently generate profits amid a bitter price war, aggressive state industrial policy raises echoes of how China took control of solar-cell manufacturing a decade ago. The investigation is a win for France — home to the mass-market Renault, Citroen and Peugeot brands, which have relatively little exposure to China. President Emmanuel Macron’s administration has long warned of an influx of Chinese vehicles and is working on adjusting its own state-funded bonuses for EV purchases in France, with the aim of favoring European production.
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