ARKANSAS, Sept 14 (Future Headlines)- The global electric vehicle (EV) market is rapidly evolving, with countries and regions vying for supremacy in this transformative industry. In this context, Ursula von der Leyen, the EU Commission chief, recently made a significant announcement regarding an anti-subsidy probe into Chinese electric vehicles (EVs). Her declaration at the European Parliament that Europe will do “whatever it takes to keep its competitive edge” underscores the intense competition and strategic importance of the EV sector.

China’s footprint in the European EV market has expanded significantly, with its market share doubling to approximately 8% this year compared to the previous year. This surge can be attributed to aggressive pricing strategies employed by state-backed Chinese manufacturers. While domestic demand in China has faced challenges due to economic uncertainties, these manufacturers have sought to stimulate overseas sales, particularly in Europe.

  • Global government support for the EV sector

It’s crucial to recognize that China is not alone in providing extensive support to its EV sector. Governments worldwide are taking steps to bolster their EV industries, viewing them as vital for economic growth and environmental sustainability. These measures include tax incentives, subsidies, infrastructure development, and regulatory adjustments.

The European Union (EU) is actively promoting the growth of its EV industry. It offers a range of incentives, such as tax breaks for manufacturers, substantial subsidies for EV buyers, and tax credits for households and businesses installing EV chargers. These incentives aim to accelerate EV adoption, reduce emissions, and stimulate the green economy.

Across the globe, governments perceive support for the EV sector as essential for maintaining their industrial competitiveness. This perspective aligns with the broader recognition that the future of transportation is electric. Nations aim to protect domestic industries, create jobs, and stimulate innovation within their borders.

Ursula von der Leyen’s call for probes into China’s EV subsidies may, in part, be political rhetoric. As she seeks a second term as the EU’s top political executive in upcoming elections, her statements can be seen as a strategic move to gain political leverage. Additionally, given the challenges faced by Europe’s auto sector, including rising costs, curtailed production, and economic pressures, her stance can be perceived as a defensive measure to protect domestic interests.

  • Supporting Europe’s auto sector

The European car industry is a cornerstone of the regional economy, contributing significantly to tax revenues and job creation. Sales of European automakers, including Volkswagen, BMW, and Renault, experienced a downturn in 2022. However, 2023 has shown signs of recovery, with sales and exports picking up. Any potential slowdown in the influx of competitively priced foreign cars into Europe could provide relief to domestic producers.

Interestingly, the mere threat of an investigation into China’s subsidies might have a substantial impact. It could potentially slow the pace of Chinese EV imports while further boosting the sales of European vehicles. In this scenario, Ursula von der Leyen could indirectly benefit Europe’s manufacturers without delving deeply into China’s subsidy practices.

While the threat of an investigation may serve Europe’s interests, carrying out such a probe poses its own set of challenges. It could strain trade relations with China and potentially unveil the extent of Europe’s own support measures for the EV sector, leading to international tensions. Therefore, the decision to pursue the investigation is not without risks.

Writing by Alireza Sabet; Editing by Sarah White