CHEAP EVs are being probed over a potential “unfair advantage” – and prices are now set to rise.
The European Commission has announced that it will investigate the flood of low-priced electric cars from China that is overwhelming the continental market.
GettyThe EU is investigating whether Chinese companies flooding the bloc with cheap EVs have an unfair competitive advantage due to state subsidies[/caption]
Chinese firms are able to offer their vehicles at substantially lower prices because they are backed by subsidies from the communist government.
This allows them to offer cars for an average of 20% less than EU manufacturers.
Drivers have been flocking to previously niche Asian manufacturers as the global cost of living crisis hits home.
According to the latest figures from the Chinese Passenger Car Association, car exports from the country increased by almost a third last year.
Indeed, the Commission itself confirmed that Chinese cars now account for 8% of the sales in Europe and could reach 15% by 2025.
However, the EU is suspicious of the imported cars and fears have been growing that their cut-price output could be undermining European manufacturers.
The Commission will now examine whether these firms hold an unfair “competitive edge” as a result of the subsidy programme and consider imposing heavy tariffs on the cars they produce to rebalance the market.
This would represent a blow for consumers as it would push EV prices up rather than forcing big-name brands to slash their prices in order to meet the competition.
Commission president Ursula von de Leyen announced the investigation on Wednesday, saying: “Global markets are now flooded with cheaper electric cars. And their price is kept artificially low by huge state subsidies.
“Europe is open to competition, not for a race to the bottom.”
The Commission, which effectively acts as the government of the EU, will report back in 13 months with a decision on how to address the problem as they see it.
If they decide to impose tariffs, these will hit some major car brands including Volvo and MG, which are both owned by Chinese companies.
The report will also assess the necessity of tariffs on non-Chinese EV companies including Tesla, Renault and Lotus.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (the automotive trade body in the UK) said: “We will monitor the situation and carefully assess the potential for any impact on the UK.
“However, the industry is committed to free and fair global trade and has been successful on that basis.
“The immediate priority is our own competitiveness – both manufacturing and market – and the development and implementation of a strategy to enhance the UK offering.”
For their part, China’s commerce ministry hit back at the announcement as “naked protectionist behaviour”.
A spokesperson said: “China believes that the EU’s proposed investigative measures are to protect its own industry in the name of ‘fair competition’… and will have a negative impact on China-EU economic and trade relations”
They also claimed that the imposition of tariffs would “seriously disrupt and distort the global automotive industry supply chain, including the EU”.
It comes after the CEO of a major car brand admitted that a “huge issue” with EVs would remain unresolved for several years to come.
Meanwhile, an experienced mechanic explained why EVs cost more, don’t last as long and aren’t actually better for the environment than traditional cars.