Take the electric vehicles sector. It is a crucial industry for the clean economy, with a huge potential for Europe. But global markets are now flooded with cheaper Chinese electric cars. And their price is kept artificially low by huge state subsidies.

This is distorting our market.

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.

..."We don't want to see Chinese electric vehicles benefiting from our climate policies," [EPP-CSU leader Manfred] Weber told MEPs after von der Leyen's annual address. "We have to activate our trade defense instruments to avoid another solar panel attack [sic]," he added, referring to a previous trade fight that devastated Europe's solar power players a decade ago....

Commenting on the market dynamics, Research Analyst Abhik Mukherjee said, "EV sales in Europe are increasing at a slower pace than expected. But since many European brands target to convert most of their models to electric by 2025, we expect EV sales to accelerate in the next two years. European automakers need to keep a close eye on Chinese competitors. Most Chinese brands, like BYD, Lynk, NIO and XPeng, made their European debut in 2021, selling just under 21,000 EVs cumulatively. In 2022, Chinese brands sold almost 58,000 EVs, capturing over 2% of the market. With the current trajectory, their share is expected to double to around 5% by the end of 2023."

..."The stakes are high for Europe's automotive industry: four out of five cars sold in Europe are assembled locally," the ["Chinese Challenge to the European automotive industry"] report added.

Having recognized the potential of electric vehicles 15 years ago, China has since invested vast resources in building a competitive electric vehicle ecosystem manufacturing. As a result, it now leads the global EV landscape, selling over double the number of BEVs in 2022 compared to Europe and the US combined, while also holding a competitive edge in nearly all aspects of the BEV value chain. Because they account for more than 80% of EV sales in [China], Chinese brands have seen their [domestic] market shares climb from less than 40% in 2020 to close to 50% in 2022, while the country's automotive trade balance went from a -USD31bn [export] deficit to a +USD7bn surplus over the same period. At the same time, already in 2022, three of Europe's best selling BEVs were Chinese imports. As BEVs eventually grow to account for all new car sales in Europe, Europe-made cars are likely to be substituted by those made in China...

"Europe is also the world's export powerhouse in the [automotive] sector, with car trade generating between 70 billion and 110 billion euros in trade surplus for the European economy every year over the past decade."

The [Allianz SE] report said the U.S. Inflation Reduction Act (IRA) had made Europe a target for Chinese exports.

archive EU welcomes correction to US green subsidies act

While Europe remains comparatively open to imported EVs— Tesla for instance, accounts for 20 percent of fully-electric car sales in Europe—the U.S. is "set to be a much tougher market to crack for Chinese vehicles" because of the IRA, the report said....

This would represent a fast step forward for the Chinese car brands, as their cars accounted for less than 10 per cent of the 1.1 million battery electric vehicles (BEVs) sold in Europe last year [2022], according to a report released by KPMG on Monday in Shanghai at China's first Carbon Neutrality Expo.

Allianz| Automotive industry unplugged (16.06.23)
China-made vehicles make further inroads. Three made-in-China battery-electric vehicles have been some of the category's best-selling models year-to-date, bringing the share of Chinese imports to about 3-4% of total registrations (compared to virtually zero in 2019).

Of new EVs sold in Europe so far this year, 8% were made by Chinese brands, up from 6% last year and 4% in 2021, according to autos consultancy Inovev. And more are coming. At least 11 new, < wipes tears > mass-market, China-made EVs will launch in Europe by 2025, according to a study by Allianz. Western automakers are rattled, with Carlos Tavares, the CEO of Peugeot-to-Fiat carmaker Stellantis [!], warning last month of an "invasion" of cheap Chinese EVs in Europe.

archive batteries that are eligible for US tax credits

The average price of an EV in China was less than 32,000 euros ($35,000) in the first half of 2022 compared with around 56,000 euros in Europe, according to researchers at Jato Dynamics. But Chinese brands are likely to struggle to sell cars in Europe as cheaply as at home.

Logistics, sales taxes, import duty and meeting European certification requirements all add costs, said Spiros Fotinos, Europe CEO for Chinese brand Zeekr, owned by Geely.

archive a special free-trade partner status for critical minerals

Surveys indicate most potential EV buyers in Europe do not recognise Chinese brands. Those who do are hesitant to purchase a Chinese car—reminiscent of Japanese and South Korean automakers' decades-long struggle to win trust and adapt to European tastes. Just 14% of 1,629 German consumers surveyed by YouGov in 2022 were aware of BYD, the world's second-largest EV maker after Tesla. A total of 17% had heard of premium brand Nio, while 10% knew of Geely's Lynk & Co and 8% of XPeng. Of the 95% of consumers aware of Tesla, 10% would consider buying one as their next car, the survey showed. But among those aware of Chinese brands, 1% or fewer would consider buying one.

[Alexander Klose, Exec VP of Chinese EV brand] Aiways said it decided against advertising its Chinese heritage due to concerns that consumers would be hesitant about buying Chinese-made products. Several Chinese carmakers have secured five-star safety ratings under Europe's safety standards, going well beyond legal requirements to try to overcome customer doubts.