Foreign brands including Tesla to face scrutiny as part of EU probe into China car subsidies

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Tesla and European carmakers that export from China to the EU are set to come beneath scrutiny as the bloc probes whether or not the nation’s electrical autos business is receiving unfair subsidies, mentioned Brussels’ most senior commerce official.

EU government vice-president Valdis Dombrovskis on Tuesday mentioned there was “sufficient prima facie evidence” to justify the probe into imports from China of battery-powered autos, which Brussels fears might overwhelm the bloc’s car business.

“Strictly speaking, it’s not limited only to Chinese brand electrical vehicles, it can be also other producers’ vehicles if they are receiving production-side subsidies,” mentioned Dombrovskis in an interview, responding to a query on whether or not Tesla or Geely, the proprietor of Sweden’s Volvo, may fall beneath the probe.

He spoke with the Financial Times on the conclusion of a five-day journey to Beijing, throughout which he mentioned he was continually pressed by his Chinese counterparts concerning the probe.

For Beijing, the EU’s announcement this month of the anti-subsidy investigation days earlier than Dombrovskis’s go to opened a brand new entrance in current tensions between the 2 buying and selling superpowers.

The EU was “open to competition” within the EV sector, however “competition needs to be fair”, mentioned Dombrovskis, including that different massive economies had already launched tariffs on battery EVs from China.

“The EU is now probably the largest market which is open for Chinese producers,” he mentioned.

During the go to, Dombrovskis pursued an bold agenda of attempting to persuade Beijing to dismantle what European firms say are a whole lot of business obstacles that contributed to a report commerce deficit final 12 months of virtually $400bn.

Both sides mentioned they made some progress on Dombrovskis’s go to, asserting a “mechanism” on Monday night to focus on export controls — mirroring an identical effort between Beijing and Washington — as properly as an settlement from China to purchase extra EU agricultural items.

China additionally pledged to prioritise resolving issues such as a backlog in approving licences for European toddler formulation makers and obstacles to imports of luxurious items.

But Beijing additionally made clear its displeasure with the anti-subsidy probe. Dombrovskis mentioned his counterparts raised the matter in each assembly.

Chinese commerce minister Wang Wentao informed Dombrovskis on Sunday the fast growth of China’s EV sector had been the end result of analysis and growth innovation, free competitors and a “complete industry system”.

“Wang Wentao expressed serious concern and strong dissatisfaction that the EU would initiate an anti-subsidy investigation into Chinese electric vehicles,” the commerce ministry mentioned on Tuesday, accusing Brussels of “protectionism” that will have an effect on environmental co-operation and the soundness of international automotive provide chains.

Tesla already exports electrical automobiles to Europe from its Shanghai gigafactory, though these numbers may fall following the opening of a facility in Berlin final 12 months, mentioned analysts. About one-fifth of all EVs offered in Europe are manufactured in China.

In the primary half of this 12 months, Chinese-made autos accounted for 11.2 per cent of EVs offered in Germany, in accordance to a quick by the Center for Strategic and International Studies this month.

About 91 per cent of these automobiles had been from Chinese-owned European brands such as Britain’s MG, owned by China’s SAIC, or Volvo’s Polestar, or from joint ventures between European and Chinese firms such as Dacia Spring, Smart or BMW iX3, mentioned the CSIS.

Dombrovskis additionally emphasised that new Chinese information legal guidelines had been a “systemic problem” for overseas companies working within the nation. European firms have complained that the legal guidelines, which require teams to retailer information regionally, are obscure and cumbersome to observe.

“If companies . . . need to have the licensing for data transfers of important data but nobody has defined what is important, it’s difficult,” he mentioned. “Providing more clarity would already be a good starting point.”