The European Commission has launched an anti-subsidy investigation into electric vehicles (EVs) imported from China, responding to a significant increase in their market share within the European Union. The inquiry, announced in October 2023, examines whether Chinese manufacturers benefit from state subsidies that allow them to sell vehicles at lower prices than their European competitors.
The investigation follows a period of substantial growth for Chinese-made EVs in Europe. According to data from the Rhodium Group, the share of the EU’s electric vehicle market held by Chinese brands rose from 0.5% in 2019 to 8% in 2023. The report notes that brands like BYD and SAIC-owned MG have gained traction with European consumers.
In her State of the Union address on Sept. 13, 2023, European Commission President Ursula von der Leyen announced the formal probe. “Global markets are now flooded with cheaper Chinese electric cars. And their price is kept artificially low by huge state subsidies,” von der Leyen stated. “This is distorting our market.”
The Commission’s investigation will determine whether to impose countervailing tariffs on these vehicles to offset any identified unfair subsidies. Such measures would be in addition to the existing 10% tariff the EU applies to all imported cars.
China’s Ministry of Commerce responded to the announcement, describing the investigation as a “nakedly protectionist act that will seriously disrupt and distort the global automotive industry and supply chain, including the EU.” A spokesperson for the ministry urged the EU to conduct the inquiry in compliance with World Trade Organization rules and create a fair, non-discriminatory environment for the industry.
Industry analysts and market data indicate several factors contributing to the increased sales of Chinese EVs in Europe. The primary driver cited is price competitiveness, with many Chinese models offered at a lower cost than European-made equivalents. The availability of a wider range of models, particularly in the more affordable segments of the market, has also been identified as a key factor.
The trend occurs as the EU pursues its own climate goals, including a 2035 phase-out of new gasoline and diesel car sales. This policy has spurred overall demand for electric vehicles across the continent. At the same time, elevated energy and fuel prices in Europe have made the lower running costs of EVs more attractive to consumers.
The European Commission’s investigation is expected to conclude within 13 months of its initiation. The outcome could result in the imposition of new tariffs, which would directly affect the price and availability of Chinese-made electric vehicles for European consumers.
