German car association rejects anti-subsidy measures targeting Chinese EVs in EU

The anti-subsidy probe launched by the European Union (EU) against Chinese electric vehicle (EV) companies will not protect the automotive industry in the block but risk harming it instead, German automotive

industry experts warned.

The anti-subsidy measures initiated by the EU, which threaten punitive tariffs on EVs imported from China will not solve the challenges of the German and European automotive industry, Hildegard Mueller, president of the Association of the Automotive Industry (VDA), said in a recent interview with German newspaper Welt Am Sonntag.

China is an important market for German carmakers, which are involved in financing the green transformation at home with their revenue in China, according to the VDA chief.

The possible trade conflict triggered by the investigation may also put jobs in Germany, that are dependent on business with China, at risk, argued Mueller.

Interdependencies and risks should be evaluated ahead of the probe, Mueller said, suggesting that the car industry should resort to dialogue instead of confrontation to settle disputes.

The EU launched in October 2023 an anti-subsidy investigation into the imports of battery electric vehicles from China after Ursula von der Leyen, president of the European Commission, alleged in September that imported Chinese EVs would flood Europe and distort the auto market.

The growth in sales of battery electric vehicles (BEVs) in Germany, the largest automotive market in Europe, slowed in 2023. Data from the Federal Motor Transport Authority shows that a total of around 520,000 BEVs were registered in Germany last year, up 11.4 percent from 2022. The pace of growth has slowed considerably compared with 2022, back when new EV registrations climbed by over 30 percent.

High EV prices in the EU are believed to be one of the main factors that keep prospective buyers at bay. Despite efforts made by local manufacturers to bring down the cost, price parity of EVs with conventional cars still remains a distant goal for the EU.

Against this backdrop, the anti-subsidy investigation on Chinese EVs in the EU, according to Germany's Transport Minister Volker Wissing, will not make electric cars cheaper even if competition becomes less intense.

Speaking against protectionism, Wissing told the German newspaper Neue Osnabruecker Zeitung that Germany does not want to seal off the market but to be engaged in global competition.

Wissing urged companies to produce affordable EVs in the EU that the average wage-earner can afford and proposed that trade agreements instead of punitive tariffs are the right way to create fair competition.

Chinese Minister of Commerce Wang Wentao, at a roundtable in Paris on April 7, said that Chinese EV manufacturers' rapid development is a result of constant tech innovations, a well-established supply chain system and full market competition, rather than subsidies.