EU launches probe into China’s EV subsidies, targeting Tesla and European carmakers

The European Union (EU) is set to investigate China’s electric vehicle (EV) industry for alleged unfair subsidies. Valdis Dombrovskis, the EU’s executive vice-president, has stated that there is “sufficient prima facie evidence” to warrant a closer look at the EV imports from China, with concerns that these subsidies could potentially harm the EU’s own automotive sector.

While the investigation initially targeted Chinese EV brands, Dombrovskis clarified that it could extend to cover other foreign producers if they are found to be benefiting from production-side subsidies. This implies that the probe would include brands such as Tesla, which builds Model 3 and Model Y cars at Giga Shanghai destined for some EU markets.

Geely, the owner of Volvo, and other European carmakers that export EVs from China to the EU would also be included.

“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,” Dombrovskis told The Financial Times.

On his recent trip to China, Dombrovskis said government officials expressed their displeasure with the investigations, considering it an act of “protectionism” that could disrupt environmental cooperation and global automotive supply chains. Dombrovskis, however, emphasizes that the EU remains open to competition in the EV sector but insists on fair competition, pointing out that several major economies have already imposed tariffs on battery EVs from China.

“Wang Wentao expressed serious concern and strong dissatisfaction that the EU would initiate an anti-subsidy investigation into Chinese electric vehicles,” China’s commerce ministry said.

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