In battle for EV dominance, China downplays Europe's tough stance. Here's why

The European Union (EU) is battling against a flooding of cheap Chinese electric vehicles (EVs) in many markets in the continent and recently announced a probe into subsidies such models enjoy. But while most expected Beijing to hit back strong - at least offer a bitter verbal rebuke, the response from the world's second-largest economy has been anything but.

Car factory
File photo used for representational purpose. (AFP)
Car factory
File photo used for representational purpose.

China is the world's largest car and EV market - both in terms of production and sales. Local brands have not just grown in number but have even started setting sights on far-flung countries in Europe. That most of the already available electric models carry a low price - primarily owing to state-sponsored subsidies in China - means that customers in many European countries are taking the plunge, leaving European manufacturers gasping.

European Commission President Ursula von der Leyen recently said a probe would be launched. “Their price is kept artificially low by huge state subsidies. This is distorting our market," she said. "And as we do not accept this distortion from the inside in our market, we do not accept this from the outside."

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The curious case of missing counter-fire

China's reaction to the recent developments in EU was expected to be swift and severe to an extent. But Beijing has thus far not openly slammed the decision of a probe. In fact, and on the contrary, the country's Vice Premier He Lifeng stated China is willing to set up working groups to solve the matter. He did, however, add that the probe itself is a matter of concern.

China's reaction, or rather the lack of it, could be stemming from geo-political factors. Analysts mostly agree that Beijing currently needs to walk a shaky path where it needs to bolster its own vehicle and EV market while maintaining a largely positive approach towards its top trade partners. Internal economic compulsions may also be dictating Beijing's approach to what many term as a pushback from European countries as far as EVs are concerned.

Seek and retreat

It is not that Beijing was not been critical - and openly so - about an EU probe initially. When reports of such a potential probe began doing the rounds early this month, the country termed it as a ‘naked act of protectionism.’ But China has since dialled down significantly.

The EU market is crucial for China and not just for automobiles. This is especially true as the US has already announced incentives on EVs manufactured locally and is looking to expand the scope to other products too. In a fast-evolving battle that is fought on multiple fronts, China is looking at having the cake and taking only timely bites from it.

First Published Date: 02 Oct 2023, 11:39 AM IST
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