China hits back at Europe, finally, over EV subsidy probe issue

The European Union's decision to launch a probe into subsidies on electric vehicles (EVs) at a time when Chinese EV makers are looking at dominating the market had met with a lukewarm response from Beijing. But now that the probe has been opened officially, the country has bared its fangs in no uncertain measure.

China's sharp reaction was expected. But it was expected sooner. Nonetheless, the country blasted the formal launch of European Commission probe into EV subsidy and stated that it had been given 'less time' for consultations and that it is ‘deeply dissatisfied.’

The probe itself pertains to state subsidies on EVs - in the form of grants, loans, tax cuts, rebates etc - that may be benefiting Chinese players in Europe enormously and leaving European brands without much teeth with which to bite into a sizeable chunk of the market. Reports suggest these brands are mostly unable to compete - on price point - with Chinese EVs that have begun flooding European car markets. And because battery-powered mobility is still a relatively new technology, most buyers would tend to prioritise a cost-effective option over most other relevant factors.

According to data, the share of Chinese EVs in European EV market is currently at eight per cent and is expected to rise to 15 per cent by 2025. The increase is coming at the expense of European brands. And it is not seen politely by the European industry.

While it is claimed that China has been given adequate consultation materials on the matter, China has pointed to the opposite. Beijing says the factors prompting the probe lacks appropriate evidence and do not conform with World Trade Organization rules. It is unlikely that the reaction is going to hinder the progress of the probe but the reaction nonetheless could escalate in intensity.

(With input from Reuters)

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