EU lawmakers tackle subsidies for Chinese electric vehicle makers

Shares of Chinese electric vehicle makers fall after the European Union (EU) regulators have launched an investigation targeting government subsidies to Chinese electric vehicle makers such as Nio (NIO), BYD Co. (BYDDY) and XPeng (XPEV).


  • European regulators on Wednesday launched an investigation into Chinese state subsidies to electric vehicle (EV) makers in a bid to protect the domestic industry from growing competition.
  • The move could negatively impact sales of Chinese EV makers like Nio, XPeng and BYD, while benefiting European automakers and US EV makers including Tesla.
  • The move highlights Europe's tougher stance on China, in contrast to the more conciliatory approach of previous years.

The investigation was launched in a bid to protect domestic automakers and highlight growing competition between Europe and China. In recent years, traditional European automakers like Volkswagen (VOW), Mercedes Benz (MBG), BMW (BMWYY) and Stellantis (STLA) have faced increased competition from Chinese electric vehicle makers, which have benefited from state subsidies. massive for electric vehicles.

Registrations of Chinese cars in the EU jumped 130% year-on-year in the seven months to July, while those of European cars rose just 36%.

“Global markets are now flooded with cheaper Chinese electric cars. And their price is kept artificially low thanks to huge state subsidies, & #34; European Commission President Ursula von der Leyen said this in her 2023 State of the Union address on Wednesday.

Who will benefit?

The investigation could lead to trade restrictions such as tariffs on imports, which could negatively impact Chinese automakers. sales in the EU. This could level the playing field for European automakers with their own electric vehicle models that have been repeatedly undercut by their Chinese competitors.

American electric vehicle makers like Tesla (TSLA) could also benefit, as they would not be subject to the same investigation as their Chinese counterparts. It's important to note that while the EU is interested in Chinese subsidies, electric vehicle makers in the United States are also eligible for tax credits if they meet certain criteria.

Tesla reported its own sales growth in Europe, with its share of the European electric vehicle market increasing 7 percentage points to 19% in July. The company's Model Y and Model 3 were the two best-selling electric vehicles in June, followed by Volkswagen's ID.4 and Fiat 500e in third and fourth, respectively. Overall, registrations of all U.S.-made electric vehicles more than doubled year over year in June.

Shares of Tesla rose more than 1% in early trading Wednesday, while those of Chinese electric vehicle makers Nio and Xpeng fell 3%. Shares of BMW and Stellantis, which own European brands like Opel, Peugeot, Citroën, Alfa Romeo and Fiat, rose by around half a percent.


The European approach towards China

Wednesday's decision is a sign of the rise in trade tensions between Europe and China. Until recently, European lawmakers had taken a more conciliatory approach toward China than their American counterparts, with the latter two countries embroiled in a trade war since 2018.

Nonetheless, in his State of the Union address, von der Leyen stressed maintaining open lines of communication and dialogue with China, and said “de-risking, not de-coupling” will be its strategy for the future.

Have Do you have any news advice for Investopedia journalists? Please email us at


Like this post? Please share to your friends:
Leave a Reply