By Reuters reporters

LONDON (Reuters) – The European Commission launched an investigation on Wednesday into whether to impose punitive tariffs to protect European Union (EU) automakers against Chinese electric vehicle (EV) imports it says are benefiting from excessive state subsidies.

EUROPEAN COMMISSION PRESIDENT URSULA VON DER LEYEN

“Global markets are now flooded with cheaper electric cars. And their price is kept artificially low by huge state subsidies.

“So I can announce today that the Commission is launching an anti-subsidy investigation into electric vehicles coming from China. Europe is open to competition. Not for a race to the bottom.”

FRENCH EUROPE MINISTER LAURENCE BOONE

“We won’t let our market be flooded by over-subsidised EVs that threaten our companies just as it had happened with solar panels.”

FRENCH FINANCE MINISTER BRUNO LE MAIRE

“Let me welcome the probe launched by EU Commission President Von der Leyen into subsidies from which Chinese companies are benefiting. If those subsidies do not conform to the rules of international trade, Europe needs to be able to have a response, to stay competitive and defend its economic interest.”

UK TRADE MINISTER KEMI BADENOCH

“I think it just highlights the difficulties that all countries are having with the supply chain for electric vehicles. At the moment, what we need to make sure is that our auto industry survives and thrives.”

ITALY’S TRANSPORT MINISTER MATTEO SALVINI

“The League (party) has been denouncing this risk for years, Europe is waking up only now: were they distracted, incompetent or complicit?”

GERMANY’S VDA AUTOMOTIVE INDUSTRY ASSOCIATION

“The VDA is committed to free, fair and rule-based trade, both for exports and imports from third countries … Damage must be causally quantifiable and the community interest must be taken into account. Possible backlash from China must also be taken into account.

“One thing is clear: an anti-subsidy investigation alone will not help to solve the existing challenges with regard to the competitiveness of the European landscape. Policymakers in Brussels and Berlin must create the framework conditions to ensure that the transformation succeeds.”

SIGRID DE VRIES, DIRECTOR GENERAL OF THE ACEA EUROPEAN AUTOMOBILE MANUFACTURERS ASSOCIATION

“We will now study the details, and stand ready to participate in the enquiry as an interested party.

“China’s apparent advantage and cost-competitive imports are already impacting European auto makers’ domestic market share, with a massive surge in electric vehicle imports in recent years. At the same time, the US Inflation Reduction Act (IRA) is also a game-changer in the electric vehicle value chain.

“Von der Leyen’s announcement is a positive signal that the European Commission is recognising the increasingly asymmetric situation our industry is faced with, and is giving urgent consideration to distorted competition in our sector.”

AIWAYS VICE PRESIDENT OVERSEAS OPERATIONS ALEXANDER KLOSE

“Aiways is in a special position here. Since we are currently concentrating exclusively on markets outside China, we do not participate in the consumer subsidies in the Chinese market – from which, incidentally, all manufacturers in China benefit, including Volkswagen, BMW and Tesla.”

“We are also curious about how possible reviews would affect non-Chinese manufacturers that produce vehicles for the global market within China.”

“Additionally, we are surprised that affordable NEVs are constantly demanded to make the switch to electric mobility attractive and now suddenly there are complaints that vehicles are too cheap. We would also strongly welcome NEVs becoming cheaper overall so that Europe remains a strong manufacturer and the automotive industry does not go the way of the mobile phone industry.”

ROCKY MOUNTAIN INSTITUTE SENIOR PRINCIPAL, KINGSMILL BOND

“The Chinese government just stopped the subsidies and contrary to popular perception of what that meant, prices fell. The reason why stuff is cheaper in China is because they’re the workshop of the world and because they’ve had a proper policy for 20 years.

“They’ve been trying to build this industry for a very long time. It did, of course, require subsidies to get off the ground and it required joined-up thinking from government and a lot of subsidies at the beginning.”

CITI ANALYSTS:

“Whilst the probe will likely take a long time, and the result and policy impacts are unclear, it seems obvious this will raise awareness of potential policy risk for China OEM exporters to Europe, who in turn may be more careful in their volume and pricing strategies, which could reduce pressure on European OEMs.”

EQUITI CAPITAL CHIEF MACRO ECONOMIST, STUART COLE

“The EU is concerned about the ability of its own EV industry to compete on the global stage (it is also up against the US IRA legislation too) and this move is therefore a way of trying to put things on a more even keel with at least one of the major producers of EVs.”

AJ BELL HEAD OF FINANCIAL ANALYSIS, DANNI HEWSON

“Keeping the playing field level will be vital if this sector is to thrive in Europe and with relations between China and the West increasingly strained, no one would be surprised to find those successful Chinese EV makers hit by tariffs to keep the price of their cars on a par with those rolling off production lines in the EU.

“The battle for next generation of technology, whether it be EVs, AI chips or renewables, is taking place in a cut-throat arena.”