European and Chinese electric vehicles’ interests differ

The environmental issues have grown up in the last few years. The public opinion shows daily a growing interest towards actions and projects, whose aim is the safeguard of the environment. In this direction are the European Institutions, that in the last decade, started doing some concrete actions and coordinating the efforts of the Member States in the fulfillment of an energy transaction programme, aiming at substituting the fossil fuels into renewable sources. 

One of the crucial points of this project is the reachment of carbon neutrality, thanks to the substitution of the current vehicles, with electric or hydrogen vehicles, which use clean technology. For this reason, the European Union stated to interrupt by 2035 the production and commerce of new gasoline and diesel vehicles. 

However, the ambitious objective of the European Institutions has to face some difficulties with the auto sector. Indeed, if Europe relies on the German factories, it represents a model in the production and in the development of endothermic vehicles, but it is another story if the electrical vehicles market is considered. 

According to the latest estimates, the major electric vehicles productors are Tesla, the American company founded by Elon Musk, and BYD, a Chinese company that has surpassed the number of sold cars than its American competitor. 

The European production chain has to face a cruel competition that, thanks to the availability of cheap rare materials and generous investments in the development of these technologies, is able to produce and supply economical battery vehicles, than the price required by the European Union. 

A recent survey required by the European Commission has found out that the Chinese government would have given an important amount of incentives and public funds in the national electric vehicles sector, causing a potential damage for the european automotive market balance. The survey has indeed found out a disproportionality and arbitrary distribution of public money in the production chain. The Chinese companies were economically supported in each phase of the production, from the rare materials extraction, till the production of batteries and vehicles and the means’ shipping. Functionaries, engaged by Bruzelles, have also found a lot of litious and batteries at very low prices, which allow Asiatic car makers to reduce production costs and eliminate the competition in the selling of electrical vehicles. 

The European Commission, in order to safeguard the European auto sector, proposed a series of additional rates, which would be applied to all the electric vehicles imported from China and those vehicles built by western companies in the asiatic country. The additional rates should vary between 7,8% and 35,3%, depending on brands and collaboration given by each company during the survey. Among the 100 companies working in the Asiatic area, the European Commission proposed a 17,4% supplemental rate for BYD, 20% for Geely and 38,1% for SAIC. For some brands like Tesla and BMW that have collaborated with the survey there would be supplemental rates of 21%, while for those that have refused to collaborate, there is a supplemental rate of 38,1%. These economic measures should be approved and ratified by the Member States by November, in order to become effective for five years. 

The additional rates, according to the Commission, should fill the price gap among the vehicles made in Europe and in China, making the concurrence fairer and limiting the potential future economic damages. 

However, it has emerged that the important injections from the public funds in the Chinese auto sector have already provoked damage to the European economy. The amount of the asiatic producers of electric vehicles went from 1,9% in 2020 to 8,8% in 2023. Moreover, according to the European Commission’s vice president's declarations Dombrovskis “it is likely that this market share will increase by 17% by 2025, since the Chinese producers are planning to increase their exports towards the EU”. 

The immediate answer of the Chinese government has defined the inquiry of the Commission as a “protectionist act”, which would have exaggerated the effective economic aids lavished by the companies. As a sort of revenge, Pechino would have started some inquiries on the European exports of pork, dairy products and alcohol. Despite the ongoing inquiries, the Chinese government is negotiating with the European diplomats in order to find a negotiated solution that would allow both of them to avoid big economic losses. Moreover, Pechino has intensified the lobbying’s activities, aiming at convincing the Member States to distance themselves from the Commission and vote against the supplemental duties. 

China’s intention is to convince at least 15 European countries, which represent 65% of the entire population. If it succeeds in it, their contrary vote to the motion would be sufficient to cancel the Commission’s proposal. Hungary, which has strong interests in obtaining investments in the Asiatic country, has already declared against the motion, and also Germany, which is under pressure by its auto sector. Moreover, last week the First Spanish Prime Minister Pedro Sanchez publicly declared to reconsider the public opinion about the motion, distancing from his favorable vote. 

Although all parties' will is to restore trade relations, the European Union wants to reach an agreement, whose aim is the economic cooperation with Pechino and the safeguard of its strategic interests, investing in a more autonomous chain production, which resists the global market’s pressures. 

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