BYD vehicles waiting to be loaded onto the BYD Explorer No. 1, which was completed this week and bound for Europe. TANG KE / Featured China / Future Publishing (via Getty Images)
China may have economic problems, but it is in crisis as an exporter of affordable electric vehicles. European Commission investigators are now scheduled to visit Chinese EV manufacturers as part of an investigation into whether they are reaping unfair benefits thanks to government subsidies.
According to Reuters, an EU team is expected to visit BYD, Geely Automobile and SAIC Motor in the coming weeks. The visit between the two leaders will help the EU decide whether to impose higher tariffs to protect European carmakers.
BYD recently overtook Elon Musk’s Tesla to become the world leader in electric vehicle sales. The automaker, backed by Warren Buffett’s Berkshire Hathaway, keeps costs low by owning the entire EV battery supply chain in-house, which means the batteries are less expensive than electric cars. This is important as it accounts for approximately 40%.
However, many are concerned that there may be more than supply chain efficiency behind China’s low EV prices, as the existence of an EU anti-subsidy investigation suggests. . The visit is promised to be the centerpiece of an EU inquiry announced in September and expected to run for 13 months.
China’s EVs are ‘distorting the market’
“Their prices are kept artificially low by huge state subsidies. This is distorting our market,” European Commission President Ursula von der Leyen said in September when China I mentioned EV. “Just as we won’t accept this distortion from within the market, we won’t accept this from outside.”
Earlier this month, in what appeared to be a retaliatory move, the Chinese government launched an anti-dumping investigation into brandy imported from the EU, sending shares in France’s Remy Cointreau and Pernod Ricard plummeting. This move is likely the first of many, likely aimed at France, which has been pushing for EV research.
An Allianz trade report last year said Chinese EV makers posed a serious threat to European automakers, particularly “the car-dependent economies of Germany, Slovakia and the Czech Republic.” The report estimates that European carmakers could face an annual profit loss of 7 billion euros by 2030 and calls for higher tariffs on Chinese EVs.
According to Reuters, in the EU, Chinese-made EVs typically sell for 20% less than those made locally, and their share of the EV market, which has grown to 8%, could reach 15% by 2025. There is sex.
“Nothing can match BYD on price. Times have changed,” said Michael Dunn, CEO of Dunn Insights, an Asia-focused automotive consultancy. financial times Early this month. “Boards in the United States, Europe, South Korea and Japan are in a state of shock.”
Tesla CEO Elon Musk poked fun at the quality of BYD cars in 2011, but recently suggested the Chinese company would emerge as a dominant player in the global auto industry. .
In the EU, Chinese EV makers face a 10% tariff, compared to 27.5% in the US. As a result, Chinese EV makers are targeting Europe as their home market becomes increasingly crowded, but they are also growing in Southeast Asia, Mexico, Australia and elsewhere. In fact, China recently overtook Japan to become the world’s largest automobile exporter.
This month, BYD’s first charter cargo ship, BYD Explorer 1, departed on its maiden voyage. It can carry 7,000 cars, and its destination is, predictably, Europe.