SynopsisThe European Commission will launch an anti-subsidy investigation into Chinese electric vehicle imports to counter the distortion of the European market due to state subsidies. This move aims to ensure fair competition while acknowledging the importance of maintaining a dialogue with China on other matters. The European auto association ACEA welcomes this action, recognizing the challenges faced by the European auto industry. Chinese EVs have gained significant market share in Europe, prompting concerns about the impact on local manufacturers.ArticleIn a significant development, the European Commission has announced the initiation of an anti-subsidy investigation targeting electric vehicles imported from China into the European Union (EU). This decision, revealed during EC President Ursula von der Leyen's annual State of the European Union address, is driven by concerns about the distortion of the European market caused by substantial state subsidies supporting Chinese EVs.President von der Leyen stated that the influx of lower-priced Chinese electric cars into global markets, sustained by significant state subsidies, has disrupted fair competition within the EU. She emphasized the EU's commitment to open competition while addressing unfair practices both domestically and internationally.The investigation is regarded as a positive step by the European Automobile Manufacturers' Association (ACEA), recognizing the challenges posed by Chinese EVs benefiting from state support. ACEA has expressed its readiness to engage in the inquiry as an interested party once the details become available.The data illustrates the growing presence of Chinese all-electric vehicles in Western Europe. The market share of these vehicles increased from 0.5% in 2019 to 3.9% in 2021, with Chinese manufacturers capturing 8.2% of the European electric car market this year, selling 86,000 battery electric vehicles (BEVs), according to Schmidt Automotive Research.ACEA had previously cautioned that Chinese EV brands and vehicles, backed by public funding and government commitment, were making significant inroads into the European EV market. The association expressed concerns that China's competitive advantages and cost-effective imports could erode the market share of European automakers, impacting local industry.However, the investigation is expected to be complex, given that numerous European car manufacturers produce EVs in China and export them to the EU. China is a global leader in vehicle production, innovation, and component manufacturing, holding a dominant position in battery production capacity and critical raw material supply.Major German automakers, including Volkswagen and BMW Group, which heavily rely on Chinese production and exports, have yet to provide official comments on the matter. Similarly, European-based brands owned by Chinese companies, such as Volvo Cars, Polestar, and Lotus, have not issued statements.ACEA emphasizes the need for a comprehensive industrial strategy to address this intricate situation, ensuring that the European auto industry can compete effectively on a global scale.ConclusionThe EU's decision to launch an anti-subsidy investigation into Chinese EV imports reflects a commitment to fair competition within the European market. While concerns have arisen about the impact of Chinese EVs on local manufacturers, maintaining a constructive dialogue with China remains a priority. The outcome of this investigation will play a crucial role in shaping the future landscape of the European EV market.