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China's Global Times describes EU probe into EVs as 'excessive', rooted in 'jealousy'

This picture purportedly taken on Sept. 4, 2023 at the BYD section of the IAA auto show on the first day of the exhibition in Munich, Germany. (Photo by BYD)

China's Global Times newspaper has criticized Europe's probe into the country's less expensive electric vehicle (EV) production, describing the move as "excessive" and unfairly "jealous".

"To tell the truth, when Chinese new energy vehicles shone brightly at the recent 2023 International Motor Show in Germany, we heard some envious and even jealous remarks but we didn't expect Europe's response to be so 'excessive'," the Global Times said in an editorial.

"If Europe lacks the confidence and courage to win the market through fair competition, it will be impossible to establish competitiveness in the EV industry," it added.

Ursula von der Leyen, President of the European Commission, announced the investigation into Chinese EVs a week after executives at Munich's IAA mobility show said European automakers had a fight on their hands to produce lower-cost EVs and to close the gap on China's lead in making cheaper, more consumer-friendly cars.

She announced the probe in her annual address to EU lawmakers on Wednesday. “Global markets are now flooded with cheaper Chinese electric cars,” she said.

“And as we do not accept this from the inside, we do not accept this from the outside. So I can announce today that the commission is launching an anti-subsidy investigation into electric vehicles coming from China.”

She told lawmakers at the European Parliament in Strasbourg that car makers in Europe were “too often, . . . excluded from foreign markets”, and “they are often undercut by competitors benefiting from huge state subsidies.”

Von der Leyen also announced measures to improve access to finance and improve auction systems for the wind industry, which is in financial difficulty due to similar competition from China.

The EU needed to “step up” on economic security, von der Leyen said, in response to China’s own measures such as export controls on critical metals gallium and germanium.

Von der Leyen had brought up the matter with Chinese Premier Li Qiang in a bilateral meeting on the sidelines of the G20 summit in New Delhi last weekend.

Head of the automobile manufacturers trade body ACEA, Sigrid de Vries, praised the European Commission (EC) for “recognizing the increasingly asymmetric situation our industry is faced with, and is giving urgent consideration to distorted competition in our sector”.

EC's EV probe could constitute one of the largest trade cases launched as the EU tries to prevent a replay of what happened to its solar industry in the early 2010s when photovoltaic manufacturers undercut by cheap Chinese imports went into bankruptcy.

In the meantime, market shares in Chinese electric vehicle makers were sold off on the prospect of greater regulatory scrutiny from Brussels. BYD closed down 2.8 percent and Xpeng dropped almost 2.5 percent. Other electric carmakers, including Great Wall Motor and Li Auto, were also lower following the announcement.

Brussels has been under pressure to take action against Chinese carmakers. Some EU member states are concerned that major domestic carmakers risk losing their leadership as the green transition reshapes the market.

European carmakers have raised the alarm on Chinese EVs, saying lower energy and labor costs give them a comparative advantage over the European electric cars.

Peugeot owner Stellantis, the second-largest European carmaker, said it was considering building cheaper electric vehicles outside Europe and importing them, to compete with Chinese models.

If the Chinese carmakers are found to be in breach of trade rules, manufacturers could be hit with punitive tariffs by the EU, slapping levy duties against Chinese EVs.

If this should happen, China would likely impose its own retaliatory tariffs, hitting hard on European industries.

The EV probe is expected to be a focus of talks when EU trade chief Valdis Dombrovskis visits China later this month, where he is expected to renew calls for fair competition.

Beijing has blasted the West's protectionist policies aimed at shielding their own industries in the name of "fair competition", and warned economic ties could be harmed.

However, Chinese carmakers have made little secret of their ambitions to dominate Europe's electric car industry, which is the largest electric vehicle market outside China.

Warren Buffet-backed BYD's European boss Michael Shu had previously announced that their goal is to be in the top three brands by the end of the decade, and number one “if possible”.

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