EU will open investigation into Chinese subsidies for electric cars

European Commission President Ursula von der Leyen announced on Wednesday an anti-subsidy investigation into electric vehicles from China.

Global markets are awash with low-cost Chinese electric cars, von der Leyen said, addressing European Union lawmakers in Strasbourg, France.

Their price is kept artificially low by “huge state subsidies”, he said, leading to market distortions in the EU.

The EU, however, does not tolerate market distortions either from inside or outside the bloc, von der Leyen said.

“Europe is open to competition, not a race to the bottom,” he said.

An anti-subsidy investigation can potentially lead to the imposition of punitive duties on imports into the EU.

There are currently several efforts underway in different EU economic sectors to reduce the bloc’s dependence on imports from countries like China or Russia and to protect domestic companies.

In the global race for profitable clean technology industries, von der Leyen had previously called for greater independence from Chinese imports and the production of more emissions-cutting technologies in the bloc.

In March, the European Commission presented a legislative proposal on the supply of essential raw materials needed for clean technologies, including powerful batteries.

The draft law, which still needs to be approved by EU capitals and the European Parliament, aims to ensure that the bloc does not remain overly dependent on raw material imports from individual countries, including China, but diversifies its suppliers.

On Wednesday, von der Leyen reiterated that the EU must improve its economic security.

At the same time it is “fundamental to keep the lines of communication and dialogue open with China”, he said in Strasbourg.

At an EU-China summit planned for later this year, von der Leyen will advocate reducing trade and economic risks in the EU’s relationship with China, while maintaining dialogue with the country, he said.