EU investigates Chinese EV manufacturing subsidies

System

This discussion was created from comments split from: Random EV thoughts......

cannco253

EU risks trade war with China

https://www.politico.eu/article/eu-ursula-von-der-leyen-china-electric-cars-probe-trade-war/

the_amazing_raisin

https://www.boards.ie/discussion/comment/121104795#Comment_121104795

I think that article is paywalled but here's an alternative

https://ground.news/article/eu-launches-anti-subsidy-investigation-into-chinese-electric-vehicles_29513f

This is going to be an interesting one, I'm not exactly in favour of European manufacturers getting a pass because they aren't bothered producing cheaper EVs and have been laggards in electrification

However, China has a pretty long history of using domestic subsidies to artificially lower international prices and force other competitors out of the market

In any case, there's a set of agreed upon rules and if you don't like them then that's not a reason to disregard them

I imagine Berlin and Paris among others will be looking for any excuse to impose additional tariffs on Chinese EVs, however I'm hoping the commission takes a slightly more holistic view and doesn't create an environment where European manufacturers can continue focusing on expensive SUVs without being forced to compete in lower profit markets

There's also the question as to why the EU can't offer similar levels of subsidies, there were some well documented cases earlier this year of battery production in the US being prioritised because the subsidies were better than Europe

My guess is that the end result is some Chinese automakers are going to be forced to move production to Europe, and us consumers will pay the price in terms of higher costs, but perhaps reap some of the rewards in terms of more employment

If no-one is happy in the end then it's generally a sign of a good compromise 😂

munchkin_utd

Finally the EU is taking action against cheap subsidised Chinese car imports.

The initial reaction of the (especially irish, or maltese, or cypriot, or greek or other non auto manufacturing nation) consumer would be that they shouldnt be doing this, cheapo cars can never be a bad thing.

Well, yea, cheap state subsidised cars from china are great just like cheap electronics from China is great, cheap antibiotics, cheap facemasks and cheap microchips etc. We get great stuff from china so in many sectors we closed all or almost all european manufacturing capacity and depending almost exclusively on China for our needs. Its all grand till suddenly we dont get on with China, or theres a pandemic or other issue and then our one sole or main source of something suddently becomes almost impossible to get and damn expensive and we then wonder why we dont make these things in Europe any more!!

The european car manufacturers really need to get their act into gear with the move to produce half ways afforable family evs (and not another fuppin SUV), but its no good either to run them into the ground in the next 2 to 5 years in the name of free trade with a dictatorship and far from free economy in China.

liamog

The EU starting an investigation into Chinese subsidies seems only fair to me. It's much harder for a manufacturer in the EU to receive a direct subsidy due to the rules on state aid which are designed to prevent jobs moving around Europe seeking the highest subsidy. If Chinese manufacturers want to compete here they should do so on an equal footing. The investigation will seek to quantify that and placate the auto making countries of Europe.

From a selfish Irish point of view cheap subsidised Chinese cars are better at reducing our private vehicle transport emissions, than an expensive EU manufactured one.

listermint

Tbh the Chinese, whom are 100 percent definitely subsidising this space domestically have absolute rigid and strict rules for any company looking to setup shop there as is there right .

But the EU have to be doing the same. The worst outcome for consumers is Chinese dominating this space and it really is an issue of national security and eu jobs growth. Which many people couldn't care less about until its too late and it matters.

They've a long history of stealing IP from EU companies.

the_amazing_raisin

https://www.boards.ie/discussion/comment/121105473#Comment_121105473

To be frank, I'm pretty sure most European manufacturers would happily shift the majority of their production to China if they felt they could get away with it

They know they can't compete so are banging the protectionism drum to try and stay relevant

That being said, I think the world we're living in unfortunately necessitates a bit more wariness about exporting your entire manufacturing sector to another country, particularly when they country may not share all of your political views and goals

listermint

https://www.boards.ie/discussion/comment/121105519#Comment_121105519

No doubt about it.

It's up to workers though to be as protectionist and not race to the bottom. Everyone loves a good deal. But there's a huge amount of shooting your foot off going on. People don't realise until their own job is gone.

Then what...

The EU can be a pain but solidarity of market is fundamental to high standards of living.

cannco253

Not paywalled for me ?

some extracts

“But von der Leyen’s call is controversial because big German brands are heavily exposed to the Chinese domestic car market, with huge manufacturing capacity in China. Until recently Volkswagen was the biggest seller there, while BMW and Mercedes dominate the premium market. 

That means any retaliatory measures from Beijing could hammer the Germans, more than anyone else.

French cars’ share in the Chinese market has dropped to 0.4 percent by August, according to statistics released by the China Passenger Car Association — while their German counterparts account for a comfortable 17 percent.

“It should be clear that the French manufacturers [who pushed for the probe] are not only targeting Beijing, but also their German competitors,” said one senior lobbyist from a major German brand on condition of anonymity. “They will suffer from countermeasures. I fear that the Commission is prepared to risk a trade war with China in a very dangerous area.”

the_amazing_raisin

https://www.boards.ie/discussion/comment/121106300#Comment_121106300

This is partly what I was getting at regarding my comment about how European manufacturers are quite happy to offshore their manufacturing to China (e.g. BMW)

I do think China's blatant disregard for any form of international competition is pretty hilarious, almost every foreign brand that sells there can only do so by setting up a local factory or joint venture

And yet they're annoyed when other countries do the same

It's hard to know exactly what measures the Chinese government would take against foreign brands, none of them import cars into China so they can't impose similar sanctions

More likely they'll target other imports (like pork or dairy, can't wait to see our farmers complaining about that)

European manufacturers can probably carve out an exemption from tariffs because the cars they build in China are mostly sold in China

The exception is probably BMW, but they can't be accused of artificially lowering prices. Quite the opposite, they manage to sell a bucket of sh!t for high spec car prices 😂

In general I think the tariffs that may be introduced will be targeted at certain models or brands which the EU determines have received unfair state aid from the Chinese government. So it'll target the BYDs or MGs rather than the BMWs or Volvos

I also expect there'll be some degree of battery tariffs introduced. I believe there's already a tariff regime in place, but Chinese manufacturers can still undercut European ones despite that. There may be increased tariffs to force car manufacturers to build EU based battery plants

the_amazing_raisin

China says EU probe into Chinese electric vehicle exports, subsidies is protectionist

https://ground.news/article/china-says-eu-probe-into-chinese-electric-vehicle-exports-subsidies-is-protectionist_963eee

As expected, China ain't too happy

munchkin_utd

https://www.boards.ie/discussion/comment/121108316#Comment_121108316

China, the most open economy in the world to imports and investment, not.

liamog

https://www.boards.ie/discussion/comment/121108316#Comment_121108316

A probe isn't protectionist, surely they've nothing to hide and the probe won't find anything 😉

the_amazing_raisin

https://www.boards.ie/discussion/comment/121108630#Comment_121108630

Of course, I'm sure everything is above board 😏

One of the interesting things about China is exactly how they subsidise their industry

They have the same idea of purchase subsidies like we have here

They also have various subsidies to industry directly, like for example paying the capital costs of building a new factory

Nothing unusual there, but then you get into the actions of things like state owned banks and companies

You might have a bank owned by the state which is forced to give out large low interest loans to fund development. What if the loans go bad? Relax, the government will bail you out

Then you have things like state owned construction companies or suppliers which can do stuff like offer goods and services at a discount to indigenous business

Or, just to shake things up, they charge full price but also invest heavily in the customers company, which is effectively a rebate with extra steps

And finally you've got the central government which will literally turn the economic stimulus taps on full as soon as there's a problem

This kind of stuff makes it very easy to distort the true cost of something

Now it's easy to argue that other countries do the same (they do) but it's generally to a lesser extent, and there's generally some degree of market openness

China for years has known the world is addicted to cheap manufactured goods so they've been able to impose restrictions on how Western companies operate

However in this era of more hawkish markets and a strong desire to move manufacturing closer to home, all that could be under threat

Interesting times ahead methinks 😬

rdhma

Well they are not exactly dumping at the prices being charged in Europe and the EU has a long history of handing out subsidies to favoured sectors.

They are allowing 13 months for the investigation. Slapping on tariffs would likely cause a damaging trade war and German automakers have a lot to lose in China.

https://www.youtube.com/watch?v=_2UbZC2oJZM

the_amazing_raisin

https://www.boards.ie/discussion/comment/121112027#Comment_121112027

The difference in price is (apparently) due to the additional hardware needed to meet EU standards

They also include the import tariffs from China

The EU does subsidise industries, but has very clear rules on how much states are allowed to support their domestic industry

China on the other hand pretty much turns on the money printer every time there's a hint of lower growth, just look at what happened recently

There is definitely a big push from Chinese automakers to make up for softening domestic demand

At the same time it cannot be denied that the Chinese played the long game and played it well. They made the right investments earlier than any of their western counterparts and as a result are well positioned to be a dominant player in the market

I think the German automakers are somewhat insulated from reprisals because they already produce their cars for the Chinese market in China, often through a joint venture with a local company

They're also losing market share over there anyway, so maybe they think it's better to protect their European market than lose it to China

I reckon the sanctions will come elsewhere, against things China does import from Europe and probably goods that are of national significance. I wouldn't be surprised if French wines suddenly get hit with tariffs

jackofalltrades

So European car markers are happy to gouge us with overpriced EVs.

But as soon as Chinese car makers gives us decent EVs, at reasonable prices, it's full panic stations and the EU are getting involved.

They can try to limit Chinese manufacturers but they'll still get wiped out by Tesla.

This is a spectacular case of betting on the wrong horse.

rdhma

https://www.boards.ie/discussion/comment/121115222#Comment_121115222

German automaker stocks fell 2-3% on the EU announcement, Mercedes have come out against imposing tariffs.

France is driving the EU investigation, they sell barely any cars in China.

listermint

https://www.boards.ie/discussion/comment/121115428#Comment_121115428

Chinese manufacturers will wipe the floor with a stick made of tesla.

The notion tesla can compete with a fully powered up Chinese ev manufacturer is laughable. They won't.

And if you think a cheap car will be worth the destruction of economies and jobs in the EU there's a stark wake up call for people living in Europe.

There's lots coming over the next couple of decades and people will need to adjust of getting off the teeth of cheap Chinese goods. Your not getting ripped off btw your paying living wages for people in Ireland and on the continent. In China your paying people dollars a day.

Race to the bottom is what people want? Well of that's so they better start prepping to be part of the ship sink.

DrPsychia

https://www.boards.ie/discussion/comment/121116212#Comment_121116212

I made similar points a few weeks ago which were opposed. Some think the EU will create more jobs in new and developing sectors and somehow there won't be a net negative amount of of jobs in the race to the bottom.

I'm pro competition, cheaper products for consumers and tighter margins for shareholders but not to the extent that will cause the manufacturing industry to be severely damaged or collapse in Europe, displacing millions of jobs.

Gatling

We all seen this was coming,the big push for everyone to go green and go electric all geared towards cheaper Chinese tech and batteries, the EU and the West Should rapidly pivot away from eclectic cars and massively invest in clean synthetic fuels ,bad enough Chinese tech is heavily tied into infrastructure and 5g + tech going forward were going to end up bent over a very painful barrel

Padre_Pio

https://www.boards.ie/discussion/comment/121116863#Comment_121116863

I think synthetic fuels are another red herring for personal transport, same as hydrogen. Sure the exhaust emissions are less than petrol, but by the time you grow it, refine it, transport it and burn it, it's still nowhere near as environmentally friendly as an EV.

I'm sure there are some niche applications, but EVs have already emerged as the dominant technology, and China is able to dominate since they have a far better supply chain. Let's be honest, European carmakers completely underestimated public uptake of EV technology and underestimated the ability of Chinese manufacturers to make cars that were not only competitive but also much cheaper. US carmakers too, with the exception of Tesla. I would say that if Tesla didnt exist, traditional carmakers would be ever more blindsided.

jackofalltrades

https://www.boards.ie/discussion/comment/121116212#Comment_121116212

If Chinese manufacturers could wipe the floor with Tesla they would have done it by now. They need Tesla, so they can steal their ideas.

Yes we are getting ripped off on cars, €40k for an electric Golf(ID3), 28k for an E-up, 37k for a Renault Zoe that's significantly less safe than the previous model.

According to Autocar, EV prices have dropped 50% in China and gone up 28% in the EU in the last decade.

And it's not down to wages either.

JohnC.

Aren't some of these Chinese companies setting up factories in Europe and US?

Padre_Pio

BYD said it wasn't worth their while setting up an EU factory.

All the German manufacturers are partnering with Chinese companies, so I presume there will be expansions there