‘Unfair’ subsidies probe puts EU on collision course with China over EVs, batteries

‘Unfair’ subsidies probe puts EU on collision course with China over EVs, batteries

‘Unfair’ subsidies probe puts EU on collision course with China over EVs, batteries 962 814 Energy Storage Journal

September 21, 2023: The EU is launching a formal probe into Chinese subsidies for EVs and batteries, amid fears Beijing could steer Europe’s green energy transition off course.

European Commission president Ursula von der Leyen (pictured) announced the move in her state of the union speech on September 13, accusing Beijing of “flooding global markets with cheaper Chinese electric cars” and using huge state subsidies to keep prices artificially low.

“This is distorting our market. We do not accept this from the inside and do not accept this from the outside.”

Von der Lyen said the EV sector was crucial for the clean economy with huge potential for Europe, which is “open for competition not for a race to the bottom”.

The probe comes eight months after von der Lyen threatened tough action against China and other countries — such as the US and its Inflation Reduction Act — over “aggressive” moves to lure industrial projects including battery manufacturing away from the EU.

And in June, European Commission VP and batteries czar, Maroš Šefčovič, said the bloc was monitoring “massive” Chinese and US battery industry subsidies.

However, the China Chamber of Commerce to the EU expressed “strong concern and opposition” to the investigation in a statement issued on September 13 — pointing out that Chinese EV and battery makers already have commercial partnerships with European firms in EU countries as well as China.

“China enjoys a robust cooperative partnership with the European and global automotive industry networks, and the creation of each EV involves the collaborative efforts of tens of thousands of suppliers from around the world.”

The Chamber said the EU’s commitment to an open market “must be translated into tangible measures” without discriminating against foreign firms.

Potential retaliation

“Efforts to restrict products solely based on their country of origin would run counter to the EU’s World Trade Organization commitments.”

German foreign minister Annalena Baerbock told Bloomberg TV on September 17 she supported the EU investigation, despite concerns about potential retaliation.

Baerbock said von der Lyen’s commitment to “de-risk and not decouple” in terms of EU relations with China was the right approach.

 “If you are bound too closely (with China) you can endanger yourself,” Baerbock said.

Separately, Germany’s Bundesbank warned in its latest monthly report, published on September 18, that the country should scale back its reliance on China.

The bank said 29% of German companies imported essential materials and parts from China, exposing their operations to “significant” damage if this trade route were to be disrupted as a result of “increasing geopolitical tensions”.

​Nevertheless, the bank said German companies were already taken measures to reduce the strong focus on China when purchasing critical materials.

Photo: Christophe Licoppe. EU, 2023