Analysts don't think the EU's allegations of low prices for Chinese EVs are valid, and there is no unity of opinion within the bloc.
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The European Union announced yesterday that it had launched an anti-subsidy investigation into electric vehicles (EVs) from China, claiming that prices are artificially low due to huge state subsidies. In the view of several teams of Chinese analysts, the move is likely to have limited impact.
The EU's move was expected, but the actual impact will be relatively small, and the prospects for Chinese car companies to enter international markets remain intact, Sinolink Securities' automotive team said yesterday.
There have been calls from the French government, as well as the French auto industry, for tariffs on Chinese cars since April, and rumors in July that the EU could launch anti-dumping and anti-subsidy investigations, the team noted.
The EU has cited the cheap price of Chinese EVs as a reason for the investigation, but in fact, Chinese cars exported to Europe generally cost almost double the domestic price, Sinolink Securities said.
For example, the BYD Seal sells for 44,990 euros, or roughly RMB 350,000 yuan, in Europe, well above the model's starting price of RMB 189,800 yuan in China. The BYD Atto 3 sells for 38,000 euros in Europe, and the BYD Han EV sells for as much as 72,000 euros. The high pricing of these models is inconsistent with the reason for the EU's investigation, the team said.
Meanwhile, Chinese auto exports to Europe are currently modest. In the January-July period, Chinese car sales in the EU amounted to only 89,000 units, contributing only 4.8 percent of China's total car exports of 1.85 million units during the period, according to the team.
In addition, Chinese automakers can avoid these risks by setting up factories in Europe. In fact, local car companies are making frequent moves to build factories overseas, such as BYD, which is building factories in Brazil and Thailand, and SAIC, which has initiated the selection of a site for its European plant, the team noted.
Outside of the European and US markets, there is still plenty of room for Chinese auto exports, such as Chery in Russia, Turkey, and Mexico, and BYD has high sales in Thailand and Brazil, according to the team.
The annual car sales in regions other than China, the US and Europe are around 25 million units, which is comparable to the volume of the Chinese market, while the market share of local carmakers in these regions in 2022 were only 7 percent, the team said.
The outlook for China's car entry into international markets is unchanged, with exports still set to rise significantly in 2024-2025, Sinolink Securities said.
Zhongtai Securities' power and new energy team said Chinese EVs are currently sold at higher prices in Europe than in China, and state subsidies for EV purchases have been eliminated in China, in contrast to the €3,000-6,000 subsidies still available in Europe.
The team expects that the probability of the EU introducing punitive tariffs is not high, and even if it does, the impact on the sales and performance of Chinese car companies will not be very large, as Europe's contribution to China's auto exports is small at present.
At the center of the investigation is France's concern about the growing competitiveness of China's EVs in Europe, while the introduction of measures such as tariffs has a great deal of uncertainty, and the EU has not reached a consensus, Zhongtai Securities said.
As Europe's largest car maker, Germany opposes any punitive measures as its major brands have a large exposure to the Chinese market and any trade war would be costly, the team noted.
The automotive team at Huachuang Securities believes that the EU's main purpose in launching the investigation may not be to penalize Chinese EV makers, but rather as a way to increase leverage to protect European carmakers, and thus create trade protection.
In the worst-case scenario, if Chinese car makers want to enter Europe on a large scale in the future, building factories there may solve most of the issues, the team said.
CITIC Securities automotive team believes that China's EVs do not take low prices as a selling point in Europe, and competitiveness comes from technology accumulation, quality control, and user experience.
The EU's potential policy on Chinese EVs, and the timing of its implementation are not clear, the team said, adding that they remain optimistic about the competitiveness of Chinese EVs overseas.
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