At the German Handelsblatt Auto Summit on the 25th, Zhang Hui, head of NIO’s European business, expressed his opposition to the EU’s countervailing investigation and called for a fair and open market. The day before, Great Wall, the first Chinese automaker to publicly respond to the EU investigation, also made similar noises.
Since the European Commission officially launched its anti-subsidy investigation, many car companies have expressed dissatisfaction. Porsche Chief Financial Officer Luz Meschke told the Financial Times on the 25th that the German automotive industry will oppose any form of "tariff war." When the outside world is assessing whether the EU may impose tariffs on Chinese electric vehicles, the EU is also reminded that instead of attacking other countries, it is better to "formulate a new green industry strategy."
Porsche CFO: Opposes any form of "tariff war"
The Financial Times reported on the 25th that Porsche Chief Financial Officer Luz Meschke said that German automakers will "fight" the tariff war between Brussels and Beijing. "As a strong German automotive industry, we will fight against any form of new tariffs." Meschke said that this investigation is "of little help" to the EU, especially to Germany, which relies heavily on exports to China. He said that executives visited China last week to discuss strategy in China with dealers, shift the focus from sales to price, and will promote the company's "electrification transition" in the Chinese market by providing exclusive charging centers and community centers for Porsche owners in large cities.
Several Chinese electric vehicle manufacturers have also recently begun to express concerns about the European Commission's investigation. Zhang Hui, head of NIO's European business, said at the "Business Daily" Auto Summit on the 25th that "this is not beneficial to the European economy, nor is it beneficial to the German automobile industry." Most of the cars imported from China are not NIO, but from "colleagues in California" Tesla of the United States. Nio has responded to a European Commission questionnaire and will continue to "cooperate with the authorities." Reuters reported on the 24th that as the first Chinese automaker to respond to the European Commission’s questionnaire and the first public response to the anti-subsidy investigation, Great Wall Motors called for a fair and open trade environment.
342 countervailing investigations
The website of the European think tank Bruegel Institute stated that the launch of a countervailing investigation does not mean that the European Commission will impose countervailing duties. In fact, since 2008, the European Commission has launched 342 countervailing investigations against imports from China (a total of 431 investigations against imports from all other countries), 101 of which did not impose countervailing duties. In its electric vehicle investigation, the European Commission will launch a process to confirm whether China's comparative advantage in electric vehicles is natural or artificially driven by state subsidies. If China's comparative advantage is found to be real, the EU will not impose countervailing duties. If China's comparative advantage is artificially pushed up, the EU can impose countervailing duties if two conditions are met: first, China's subsidies have caused substantial damage to EU industries; second, the imposition of tariffs is in line with the interests of the EU, including the interests of domestic industries, users and consumers. But regardless of the outcome, the EU needs to further formulate its own industrial policies to stimulate the development of the electric vehicle industry, or green industry.
There are also differences in attitudes towards countervailing investigations within the EU. The Financial Times stated that the EU investigation is a victory for France because French manufacturers have far less business in China than their German competitors. A report from U.S. economic research firm Rhodium Group said Germany opposed the investigation, but France wanted to go even further. Italy is considering a similar plan and the Nordic countries have not given a clear response, but Central and Eastern European countries are likely to side with Germany.
Who do punitive tariffs hurt?
"We might as well focus on how to create competitive industrial framework conditions here. As long as we become stronger, we don't have to be afraid of competition outside Europe." Volkswagen Group CEO Oliver Blumer once said that the strong market position of Chinese automakers stems from their own strength. For example, BYD's industrial chain is highly vertically integrated and 90% of its chips and batteries are produced in-house.
The German Automobile Industry Association expressed doubts about the effectiveness of anti-dumping measures. In the EU internal market, even if EU tariffs eliminate the competitive advantages brought by foreign government subsidies, they ensure the price competitiveness of European companies. However, the tariffs will ultimately be paid by EU consumers, who will have to pay higher prices for Chinese electric vehicles.
In addition, in third-country markets, export tariffs will lose their effectiveness and the price advantage of Chinese products will still exist. Moreover, imposing tariffs on electric vehicles imported from China would raise the question of what to do with electric vehicles produced in China and exported to the EU by U.S. and European companies, which would also be hit by tariffs and could have a backlash on their respective domestic economies.