The European Commission, the administrative body of the European Union, initiated an investigation into the subsidies provided to electric vehicle manufacturers in China, as revealed by President Ursula von der Leyen during her annual State of the Union address at the European Parliament in Strasbourg.
In her speech, she underscored that Europe welcomes healthy competition but is not willing to engage in a race to the bottom. This unexpected announcement introduces a new challenge in EU-China relations, following the agreement reached in late May by the United States and Europe to reduce their dependence on Beijing rather than severing ties entirely.
During morning trading, automotive stocks in Europe remained relatively stable, erasing earlier gains of over 1%, as most sectors experienced a downturn.
Von der Leyen emphasized the need for a clear-eyed assessment of the risks at hand before a full assembly of lawmakers. She particularly pointed out the electric vehicle industry’s significance in fostering a clean economy with substantial potential in Europe. However, she expressed concern that global markets have been inundated with competitively priced Chinese electric cars, largely due to substantial state subsidies that artificially suppress their prices.
“This situation distorts our market, and just as we do not tolerate such distortions within our market, we will not accept them from external sources,” she asserted.