BYD, Geely, and SAIC Face EU Scrutiny in Electric Vehicle Investigation

• EU probes Chinese EV makers for unfair subsidies.
• Tensions rise; China calls it protectionist.
• Chinese EVs hold 8% EU market share amid strained relations.

As BYD, Geely, and SAIC brace for intensified scrutiny from the European Commission in the ongoing investigation into state subsidies benefiting Chinese-made electric vehicles (EVs), tensions between China and the EU continue to escalate. European Commission investigators are set to conduct on-site inspections at the Chinese automakers in the coming weeks to determine if punitive tariffs should be imposed to protect European EV manufacturers.

The inspectors' focus will be on BYD, Geely, and SAIC, with no visits planned for non-Chinese brands produced in China, such as Tesla, Renault, and BMW. The investigation, launched in October and scheduled to last 13 months, aims to assess whether Chinese-made EVs gain an unfair advantage from state subsidies. China has labeled the probe as protectionist, further straining relations between Beijing and the EU.

Sources reveal that verification visits are scheduled for this month and February, with inspectors already in China for on-site inspections, checking the automakers' responses to questionnaires. European Commission documents indicate that the probe is in the initiation stage, with verification visits expected to conclude by April 11.

While BYD, Geely, and SAIC, as well as the Chinese commerce ministry, remain silent on the matter, Geely refers to its October statement, asserting adherence to all laws and support for fair market competition globally.

The investigation is part of a broader geopolitical context, with China recently opening an anti-dumping investigation on brandy imported from the European Union, seemingly targeting France, a supporter of the EV probe. Chinese-made vehicles already hold an 8% share of the European Union's EV market, and this figure could surge to 15% by 2025, given their lower prices compared to EU-made models.

The strained relations between China and the EU extend beyond trade disputes, with geopolitical factors like China's closer ties with Moscow affecting diplomatic ties. As the EU aims to reduce reliance on China, particularly for materials and products crucial to its green transition, the investigation adds another layer to the complex relationship.

Meanwhile, Chinese EV manufacturers, including BYD, Geely, Xpeng, and Nio, are actively seeking to expand overseas, prioritizing sales to Europe amid fierce competition in the domestic market. The backdrop for this investigation is China's emergence as the world's largest auto exporter, shipping 5.26 million vehicles valued at about $102 billion last year, as reported by a Chinese auto association. The outcome of the investigation could significantly impact the landscape of the global electric vehicle market.

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