© Reuters. FILE PHOTO: People stand next to BYD company vehicles at the IAA Mobility 2023 motor show in Munich, Germany, September 10, 2023. REUTERS/Angelika Warmuth/Archive photo
By Donny Kwok and Brenda Goh
HONG KONG/SHANGHAI (Reuters) – Hong Kong-listed shares of Chinese electric vehicle (EV) makers fell on Thursday after the European Commission launched an investigation into China’s electric vehicle subsidies, escalating tensions between Beijing and the EU.
European Commission President Ursula von der Leyen announced the investigation in her annual address to lawmakers on Wednesday, saying: “Global markets are now being flooded with cheaper electric cars. And their price is kept artificially low by huge government subsidies.”
Analysts said the investigation could slow Chinese battery suppliers’ capacity expansion and investment cycle, although the move is unlikely to pose a major downside risk to Chinese electric vehicles.
Hong Kong shares of market leader BYD (SZ:) fell more than 3%. Smaller rivals Xpeng (NYSE:) and Geely Auto fell 0.6%, while Nio (NYSE:) fell 2%. Shanghai-listed shares of state-owned auto giant SAIC fell as much as 3.4%.
Nio and Geely declined to comment on the EU investigation, while BYD, Xpeng and SAIC did not respond to requests for comment.
Shenzhen-listed shares of battery maker CATL fell more than 1%. CATL did not immediately respond to a request for comment.
The anti-subsidy investigation, launched by the European Commission rather than an industry complaint, is likely to further sour an already strained relationship with China.
Relations between Beijing and Moscow have become more tense after Russian troops invaded Ukraine, and the EU is pushing to rely less on the world’s second-largest economy and also its No. 1 trading partner.
Meeting with Commissioner von der Leyen on the sidelines of the G20 summit in New Delhi on Saturday, Chinese Prime Minister Li Qiang urged the bloc to create a non-discriminatory environment for Chinese companies and called for stability in Sino-European relations “ “Hedging” against global uncertainties.
The EV investigation will set the agenda and tone for bilateral talks ahead of the annual China-EU summit, due to take place before the end of the year, with the focus again on the EU’s demands for wider access to the Chinese market and a The realignment of trade will lie in a relationship that Brussels describes as “unbalanced”.
While Beijing has yet to respond to the investigation, the Chinese Chamber of Commerce hit back at the EU, saying it opposed the investigation and that the sector’s competitive advantage was not due to subsidies.
Cui Dongshu, the general secretary of the China Passenger Car Association, said on his personal WeChat account that he was personally “strongly opposed” to the review and called on the EU to take an objective view of the industry’s development and not “arbitrarily” economic or economic impact to use trading tools.
The price of Chinese-made cars exported to Europe is generally almost double the price at which they are sold in China, he added.
GROWING MARKET SHARE
EU officials expect Chinese electric vehicles to undercut prices of local models in the European market by about 20%, increasing pressure on European automakers to produce lower-cost electric vehicles.
The European Commission said China’s share of electric vehicles sold in Europe rose to 8% and could reach 15% in 2025.
In 2022, 35% of all electric cars exported came from China, up 10 percentage points from the previous year, according to the US think tank Center for Strategic and Internal Studies (CSIS).
Most vehicles and the batteries that power them are destined for Europe, where 16% of batteries and vehicles sold in 2022 will be made in China, it said.
Popular Chinese models exported to Europe include SAIC’s MG and Geely’s (OTC:) Volvo.
The largest single exporter from China is US giant Tesla (NASDAQ:), CSIS data showed. They accounted for 40.25% of EV exports from China between January and April 2023, up from 36.5% in 2022.
Source : www.investing.com