The European Commission, the executive arm of the European Union, on Wednesday launched an investigation into subsidies given to electric vehicle makers in China, according to President Ursula von der Leyen.
Speaking at her annual State of the Union address at the European Parliament in Strasbourg, she confirmed the probe, saying: “Europe is open to competition but not for a race to the bottom.”
Autos stocks in Europe were higher by 0.4% on Wednesday morning after the announcement, paring earlier gains in a largely down day for most sectors.
“We have to be clear-eyed about the risks we face,” von der Leyen said.
Take the electric vehicle sector, it is a crucial industry for the clean economy with a huge potential in Europe, but global markets are now flooded with cheaper Chinese electric cars and their prices are kept artificially low by huge state subsidies.
“This is distorting our market and as we do not accept this distortion from inside our market, we do not accept this from the outside,” she added.
The EU’s von der Leyen said the bloc must defend itself against unfair practices but stressed it was equally important to keep open lines of communication with Beijing.
“De-risk, not decouple. This will be my approach at the EU-China summit later this year,” she added.