Commerce Minister Calls Claims About China’s EV Overcapacity ‘Groundless’

China's Minister of Commerce, Wang Wentao, has defended the Chinese electric vehicle (EV) industry against claims of unfair state subsidies, attributing the industry's growth to technological innovation, robust supply chains, and competitive practices rather than governmental support [para. 1][para. 2]. During a roundtable in Paris with Chinese EV companies operating in Europe, Wang dismissed accusations from the U.S. and EU as baseless. These allegations have been particularly pronounced since the EU launched an anti-subsidy investigation targeting major Chinese automakers like BYD Co., Zhejiang Geely Holding Group, and SAIC Motor Corp [para. 2][para. 3].

Wang criticized the EU’s protectionist measures and called for a fair assessment of China's industrial activities. He emphasized that global trade dynamics and supply chain developments often misinterpret overcapacity issues [para. 4]. With impending EU decisions on tariffs that could affect Chinese EVs, Wang urged Chinese firms to focus more on innovation and risk management to navigate potential market challenges effectively [para. 4][para. 5].

Despite these challenges, Chinese EV manufacturers are not slowing down their expansion in Europe; companies like SAIC and BYD are even establishing local manufacturing bases [para. 5]. Wang advised these companies to enhance their risk management strategies and seek deeper collaboration with European partners to mitigate potential impacts from regulatory changes [para. 6].

An executive from one of the involved Chinese automakers anticipates that the outcome of the EU’s investigation might be announced soon, possibly leading to new tariffs. However, there is hope that diplomatic negotiations might reduce these rates [para. 7]. Recently, the EU found substantial evidence suggesting that Chinese EV imports benefited from various subsidies such as direct fund transfers and tax breaks which led them to initiate registration of these imports for possible retrospective tariff imposition [para. 8].

The European Parliament reported that subsidies allow Chinese-made EVs to be priced around 20% lower than comparable European models. This price advantage is linked to an excess in battery supply and production capacity within China [para. 9]. Meanwhile, in the U.S., restrictive measures have been implemented under which American buyers can receive significant tax credits for purchasing EVs unless they contain batteries made in China. Additionally, concerns over national security have prompted a U.S. investigation into smart cars from China due to fears they could collect sensitive data [para. 10][para. 11].

Overall, while facing international scrutiny and potential new tariffs, China’s EV sector continues its global market penetration efforts by emphasizing innovation and strategic partnerships while navigating evolving regulatory landscapes in key markets like Europe and America.