The European investigation into Chinese public subsidies for electric automobiles could lead to a significant increase in customs duties on these cars, said European Commissioner for the Internal Market Thierry Breton on Sunday. “Generally – I do not want to prejudge what the results of the investigation that we open will give – but generally, if I look at what happens for the investigations that we open, it often results in increases in rights customs duties of 10 to 20%,” he declared on the French television channel LCI.
Thierry Breton, however, remained cautious about the outcome of this procedure. “We’ll see,” he repeated several times. The President of the European Commission, Ursula von der Leyen, announced on Wednesday the opening of an investigation into Chinese public subsidies for electric automobiles, in order to defend the European industry in the face of prices deemed “artificially low”. If, at the end of its investigation, the Commission finds violations of trade rules, it could impose punitive customs duties on Chinese vehicles, at the risk of triggering a trade war with Beijing.
“Today, there are 10% customs duties on electric vehicles arriving from China in Europe. If I take an example, in the United States, it is 27.5%,” noted Thierry Breton. During the investigation, the Europeans will look into “the direct or indirect subsidies which are received” by the manufacturers, he said. “There will be discussions with the Chinese authorities, with the car manufacturers,” specified Thierry Breton, adding that this would concern “all cars made in China, whatever their brands”. Experts estimate the cost advantage of Chinese vehicles compared to those manufactured in Europe at around 20%.
But where Brussels suspects illegal practices, Beijing simply believes it is reaping the fruits of its investments. According to China, the European approach is “openly protectionism” and “will have a negative impact on economic and trade relations between China and the European Union”. China has long relied on electric engines in automobiles and has taken a lead over Europe, particularly in battery technologies. Its manufacturers rely on their immense domestic market to now develop abroad, thanks to the strong economies of scale from which they benefit.