EU bosses have promised to help European car makers compete with the new wave of Chinese disruptors by committing to a new ‘anti-subsidy investigation’.
Ursula von der Leyen, president of the European Commission, says that the cut-price Asian brands have kicked off a ‘race to the bottom’ which is ‘distorting’ European markets.
In her annual state of the union address to EU lawmakers, the 64-year-old said that Europe was ‘open to competition’ but did not want to see firms ‘undercut’ by cheaper alternatives.
Reuters reports that the probe will look into whether the European Union needs start imposing tariffs on electric cars imported from China.
Currently, the likes of BYD and GWM Ora are benefitting from large subsidies from the Chinese government, giving them an advantage over their European counterparts.
President von der Leyen said: ‘Global markets are now flooded with cheaper Chinese electric cars. And their price is kept artificially low by huge state subsidies.
‘This is distorting our market, and as we do not accept this distortion from the inside of our market, we do not accept it from the outside.
‘I can announce today that the Commission is launching an anti-subsidy investigation into electric vehicles coming from China.
‘Europe is open to competition, but not for a race to the bottom. We must defend ourselves against unfair practices.’
The announcement comes after mounting pressure from traditional carmakers for more help in taking on the new Chinese brands.
Earlier this year, Stellantis boss Carlos Tavares said European brands were facing ‘terrible fight’ amidst an influx of new Chinese firms.
He added that the situation has left Europe’s automotive industry at a crossroads and has called for assistance from politicians.
‘The price difference between European and Chinese vehicles is significant,’ he said.
‘If nothing is changed in the current situation, European customers from the middle class will increasingly turn to Chinese models. The purchasing power of many people in Europe is decreasing noticeably.’
‘If you keep the European market open, then we have no choice: we have to fight the Chinese directly. And that applies to the entire automotive value chain.
‘Ultimately, this challenge is akin to squaring the circle. In the current context, if nothing is done in the European Union, there will be a terrible fight.’