The potential dumping of cheaper China-made electric vehicles has raised concerns among major Western countries, urging them to seek preventive measures to protect local markets as well as thwart security risks these cars pose. Several countries have voiced their opposition to permitting Chinese EVs until their concerns are resolved.
Recently, the UK hinted at banning Chinese EV cars over the allegations of unfair state support. British transport secretary Mark Harper said the government will ensure that “We have fair international trade, and that we don’t have dumping or unfair subsidy. The important thing is it’s a fair, competitive landscape.”[1]
European Union had last year launched an investigation and contemplated punitive action to protect domestic industry from cheaper Chinese electric vehicle imports. [2] “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,” said European Commission president Ursula von der Leyen.[3]
Several countries in Europe backed the EU investigation. French finance minister Bruno Le Maire said “If these subsidies do not comply with the rules of the World Trade Organization, Europe must be able to fight back.” German finance minister Robert Habeck said “It’s about looking to see if there are hidden, direct or indirect subsidies that create an unfair competitive advantage
This had invited a strong reaction from China, which warned the EU of damaged trade relations and higher EV prices for European buyers.[4] Yet, the EU launched a formal investigation into the Chinese EV business saying “The recent surge in low-priced and subsidised imports of electric vehicles from China into the EU posed an economic threat to the EU’s electrical car industry.”[5]
Industry experts welcomed the actions taken to block Chinese electric car imports as the dumping posed serious threats to European carmakers. “China’s apparent advantage and cost-competitive imports are already impacting European auto makers’ domestic market share,” said Sigrid de Vries, Director-general of the European Automobile Manufacturers Association.[6]
Following the probe, China and the EU face a high probability of a trade war, which can attract major countries like the US soon. John Naughton, senior research fellow at the Cambridge University, expressed concerns over China’s growing dominance in the global electric car market. “EVs heavily subsidised by Beijing are flooding Europe and the globe. If we don’t watch out, it could start a major trade war,” he said.[7]
The US too is getting uneasy with the possibility of Chinese electric vehicles being a security threat. There is suspicion that Chinese EVs may collect sensitive information and send it back to China.[8] Moreover, the US Department of Energy red-flagged Chinese EVs by terming the batteries used being built or assembled by a “foreign entity of concern”.[9]
The ‘Connected Car Technology’ in Chinese EVs that allows the sharing of data with devices both inside and outside the car is perceived as a big security threat. Lael Brainard, who is director of the US National Economic Council, said “Many of those vehicles can connect on a continuous basis with our infrastructure potentially, with the drivers’ smartphones, with nearby cars. So they’re collecting a tremendous amount of information.”[10]
US President Joe Biden said “China is determined to dominate the future of the auto market, including by using unfair practices. China’s policies could flood our market with its vehicles, posing risks to our national security. I’m not going to let that happen on my watch.”[11]
US lawmaker Marco Rubio demanded stiffer tariffs to block imports of Chinese electric vehicles.[12] Besides security threats, the dumping of Chinese EVs is a major issue. “A flood of Chinese imports has devastated several of America’s domestic industries in the past. It’s the same formula for disaster that we’re seeing play out with EV batteries,” said a spokesperson of Alliance for American Manufacturing.[13]
The UK too is planning to ban Chinese electric vehicles. Harper said the country will use “robust” measures to block low-cost Chinese EVs by state-backed manufacturers from taking undue advantage of the UK market.[14] “The important thing is it’s a fair, competitive landscape,” he said.[15]
[1] https://www.express.co.uk/news/uk/1877688/UK-threatens-crackdown-on-China-as-it-prepares-to-flood-Britain-with-cheap-electric-cars
[2] https://www.reuters.com/world/europe/eu-launches-anti-subsidy-investigation-into-chinese-electric-vehicles-2023-09-13/
[3] https://www.politico.eu/article/eu-ursula-von-der-leyen-china-electric-cars-probe-trade-war/
[4] https://www.euronews.com/2023/09/14/china-issues-warning-to-eu-commission-over-electric-vehicle-probe
[5] https://ec.europa.eu/commission/presscorner/detail/en/ip_23_4752
[6] https://www.politico.eu/article/eu-ursula-von-der-leyen-china-electric-cars-probe-trade-war/
[7] https://www.theguardian.com/commentisfree/2024/feb/10/china-global-dominance-electric-car-market-ev-trade-war
[8] https://www.cnbc.com/2024/03/07/china-could-flood-us-electric-vehicle-market-with-cheap-offerings.html#:~:text=there%20was%20a%20flooding%20of,for%20car%20exports%20in%202023.
[9] https://www.energy.gov/articles/department-energy-releases-proposed-interpretive-guidance-foreign-entity-concern-public
[10] https://www.nytimes.com/2024/02/29/us/politics/biden-chinese-electric-vehicles.html
[11] https://www.whitehouse.gov/briefing-room/statements-releases/2024/02/29/statement-from-president-biden-on-addressing-national-security-risks-to-the-u-s-auto-industry/
[12] https://www.reuters.com/business/autos-transportation/senator-rubio-seeks-stiffer-tariff-stop-china-flooding-us-auto-markets-2024-03-05/
[13] https://www.ft.com/content/de696ddb-2201-4830-848b-6301b64ad0e5
[14] https://www.telegraph.co.uk/business/2024/03/14/britain-threatens-sanctions-china-curb-imports-electric-cars/
[15] https://www.am-online.com/news/market-insight/2024/03/15/uk-promised-trade-sanctions-to-block-risk-of-a-flood-of-cheap-chinese-evs