The European Union is launching an investigation into Chinese subsidies for electric vehicles as the bloc frets over the ability of its industry to compete.
European Commission President Ursula von der Leyen announced the probe Wednesday, saying that the global market is flooded with cheap Chinese cars.
“Their price is kept artificially low by huge state subsidies. This is distorting our market,” the head of the EU’s executive arm said in her annual speech to the European Parliament. “And as we do not accept this distortion from the inside in our market, we do not accept this from the outside.”
The probe is being opened despite concerns about retaliation from China, a sign of growing alarm over the ability of European manufacturers to compete with China’s industry.
China is home to a slew of EV makers supported by government incentives for both industry and buyers, and many of its upstart companies have yet to consistently generate profits.
Chinese automakers, including EV leader BYD and newer entrants MG and Nio, are preparing to increase sales in Europe with a range of competitively priced EVs that, if successful, will hit mass-market manufacturers such as Stellantis and Volkswagen Group.