Concerns over anti-subsidy inquiry by EU

Growing consensus among manufacturers is investigation 'could do more harm than good'

The Financial Times and other influential Western newspapers are siding with executives from European automakers in voicing concern over the European Union's anti-subsidy investigation into imports of China-made electric vehicles.

Despite clear objections from the Chinese side, the EU announced the start of the investigation on Wednesday. The move came after European Commission President Ursula von der Leyen's address in September, claiming that global markets are being "flooded" with cheaper Chinese electric cars.

The investigation into subsidies for China-made electric vehicles exported to Europe "could do more harm than good", BMW's chief financial officer Walter Mertl said in a Friday interview with Reuters, during which he stated he did not endorse punitive tariffs.

BMW exports the iX3 from China to other parts of the world and its electric MINI vehicles will follow suit from around 2024, leaving it vulnerable to possible EU tariffs on imports from China. Mertl said the investigation would shield those who do not have significant sales in China but would affect every automaker doing business in the country, which is the world's largest vehicle market.

The Financial Times and Politico, a Washington-based publication, pointed out the EU's probe was primarily the result of pressure from the French government. French marques including Peugeot, Citroen and Renault have lackluster performance in China. Politico also reported the move is on the commission's own initiative, a so-called ex-officio investigation, instead of being triggered following a formal complaint from the EU industry, as is usually the case.

The commission said subsidies had allowed a rapid rise of cheap imports into the EU, with expected overcapacity in China likely to lead to further increases in the near future. It said the alleged subsidies were in the form of grants, loans from State-owned banks on preferential terms, tax cuts, rebates and exemptions and state provision of goods or services, such as raw materials and components, at less than adequate prices.

China's NEV subsidies, which were introduced in 2009 to stimulate the sector's development, were phased out completely by the end of 2022 after several rounds of gradual cuts.

China is "very much dissatisfied "with the anti-subsidy investigation as it lacks adequate evidence and does not conform to World Trade Organization rules, the Ministry of Commerce said in a statement issued in Beijing on Wednesday.

It said the Chinese side has not been given adequate consultation materials, in addition to a very short time to engage in consultations. The European Commission advised parties wanting a hearing to request one within 15 days.