The global automotive industry is undergoing a transformation towards new energy, intelligence and networking, which is a rare opportunity as well as a severe challenge. The Chinese automotive industry has achieved outstanding achievements and advantages in this process, which has aroused fear and backlash from countries such as Europe.

Recently, in a speech delivered at the European Parliament, European Commission President Ursula von der Leyen announced that she would launch an anti-subsidy investigation into Chinese electric vehicles, claiming that the Chinese government gave unfair subsidies and preferential treatment to Chinese auto companies, resulting in Chinese cars having a low-price competitive advantage in the European market, threatening the survival and development of the European auto industry. This move has attracted widespread attention and strong opposition at home and abroad.

A spokesperson for my country's Ministry of Commerce responded that China expresses high concern and strong dissatisfaction with this, and said that the investigation measures that the EU intends to take are to protect its own industries in the name of "fair competition". It is a naked protectionist act that will seriously disrupt and distort the global automotive industry chain supply chain including the EU, and will have a negative impact on China-EU economic and trade relations.

This is indeed the case. The EU's anti-subsidy investigation on Chinese electric vehicles is not only unfounded, but also ignores the overall backwardness of Europe's automobile electrification. While launching a "commercial encirclement and suppression" of Chinese electric vehicles, it also deprives EU consumers of the right to purchase high-quality electric vehicles at an affordable price, damages the electrification process of the global automotive industry, and slows down the pace of environmental protection and carbon reduction.

Western style double standards, anti-subsidy investigation "without justification"

Anti-subsidy policy refers to the investigation of subsidized imports by the competent authorities of the importing country based on the application of its relevant domestic industries in order to protect the damaged domestic industries and restore fair competition, and to offset the subsidies enjoyed by the imported products by imposing anti-subsidy duties or price commitments.

The original purpose of the anti-subsidy policy is to maintain the international trade order and prevent a government or public institution from giving financial support or other preferential measures to domestic producers or exporters, giving their products an unfair competitive advantage in the international market, thereby damaging producers and industries of the same or similar products in the importing country.

However, the EU's anti-subsidy investigation into Chinese automobiles is clearly "without a legitimate reason."

First and foremost, the EU does not have sufficient evidence to show that Chinese cars enjoy government subsidies.

At the end of last year, BYD announced that the Han, Tang, and ATTO3 (Yuan Plus) models would officially enter Europe and be launched in Norway, Sweden, Denmark, Belgium, Germany and other countries. However, BYD cars were not "dumped at low prices" in Europe, but were sold at higher prices. The pre-sale price of ATTO3 in Germany was 38,000 euros (about 280,000 yuan), and the pre-sale price of Han and Tang was 72,000 euros (about 500,000 yuan), both of which were twice as high as in the Chinese market, and even exceeded the price of fuel vehicles of the same level of European luxury brands such as Mercedes-Benz.

Obviously, the price of Chinese cars in the European market is not lower than the cost price, nor lower than the price in the Chinese domestic market. Instead, it reflects the technological innovation and cost control capabilities of China's automobile industry.

On the contrary, the Volkswagen ID.3 produced in Germany is 2.6 times more expensive in Germany than in China, which has been widely criticized by the German people, who accuse the German government of "subsidizing" Chinese consumers.

In fact, Chinese electric vehicles have a price advantage in Europe, not because the Chinese government has given subsidies or preferential treatment, but because BYD is ahead of Volkswagen in battery technology and cost. At present, China can build battery factories at half the cost of North American or European countries, mainly because China has lower labor costs and more equipment manufacturers.

Some analysts say China's power battery system costs will drop from $130/kWh in 2020 to $59/kWh in 2030, while Europe's battery costs are expected to remain above $100/kWh in 2030.

UBS Securities Research recently disassembled the BYD Seal and analyzed that the overall cost of the BYD Seal is 35% lower than that of similar models produced by Volkswagen in Europe. According to data from research firm Jato Dynamics, in the first half of 2022, the average cost of electric vehicles in China was less than 32,000 euros, while the average cost in Europe was about 56,000 euros.

In other words, the fundamental source of China's electric vehicles' competitiveness in Europe is more mature technology and lower production costs.

Back to the subsidy issue, it is well known that domestic subsidies for electric vehicles have been declining for many years, and all direct subsidies have been withdrawn at the beginning of 2023.

In contrast, the European Green Deal adopted by the European Union in 2020, which aims to achieve carbon neutrality by 2050, clearly stipulates and requires member states to formulate corresponding support policies for electric vehicles, including providing subsidies, tax incentives, etc., in order to achieve the EU's stage goal of having at least 32 million electric vehicles by 2030.

Therefore, the EU does not have sufficient evidence to show that Chinese cars have caused substantial damage or threat to the European automotive industry.

In fact, the backwardness of the European automobile industry in the field of electric vehicles is not caused by Chinese cars, but because traditional European car companies have encountered difficulties and challenges during the transformation process.

In 2022, among the top ten automakers in the world in terms of pure electric vehicle sales, six are Chinese. More than half of the electric vehicles sold worldwide are produced in China.

China has a huge market size and growth potential in the field of new energy vehicles, while Europe lags behind. This is because China is superior to Europe in policy support and infrastructure construction for electric vehicles, rather than due to unfair competition in China.

China has formulated long-term regulations and policies such as new energy vehicle credit regulations and automobile emission standards to guide industrial investment and technological innovation; while Europe lacks unified and effective policy support and regulatory mechanisms, leading to market differentiation and confusion.

In summary, the EU's anti-subsidy investigation on Chinese cars lacks rationality and fairness, and is full of Western double standards. This irrational and irrational trade protectionist approach of "commercial encirclement and suppression" of competitors does not fully consider market rules and international order, and is not conducive to the development of the European electric vehicle industry.

With so many bad records, why does anti-subsidy always end up shooting itself in the foot?

This is not the first time that the EU has launched this kind of "commercial encirclement" against China.

Over the past decade, the EU has also conducted anti-dumping and anti-subsidy investigations on China's photovoltaic, steel, chemical and other industries on many occasions, and has taken restrictive measures such as imposing high tariffs, setting minimum import prices and import quotas.

However, these measures did not achieve the desired results.

Take the photovoltaic industry as an example. Between 2011 and 2013, a large number of Chinese photovoltaic companies entered the European market and provided low-cost and high-efficiency photovoltaic products and services, which caused European photovoltaic companies to suffer tremendous competitive pressure. Some companies even went bankrupt or closed down.

The EU believes that Chinese photovoltaic companies are taking advantage of government subsidies and low-cost dumping of products, distorting market competition and damaging the interests of the European photovoltaic industry.

Therefore, in June 2013, the EU officially launched an anti-dumping and anti-subsidy investigation on Chinese photovoltaic products, and in December of the same year decided to impose a high tariff averaging 47.6%, and reached an agreement with the Chinese government to set minimum import prices and import quotas.

As a result of the EU's restrictive measures on Chinese photovoltaic products, the European photovoltaic market has shrunk and stagnated, affecting the development of renewable energy and the achievement of emission reduction targets.

Data shows that in 2019, the EU's installed capacity of photovoltaic power generation was 131 million kilowatts, accounting for 20.4% of the global total, while it accounted for 57.5% in 2012. This shows that the EU's development speed in the photovoltaic field has slowed down significantly and lost its first-mover advantage.

Moreover, due to the high tariffs imposed by the EU on Chinese photovoltaic products, the cost for European consumers to purchase photovoltaic products has increased, reducing their enthusiasm for using renewable energy.

At the same time, Chinese photovoltaic companies have achieved cost reduction and efficiency improvement through technological innovation and market expansion, becoming the world's largest photovoltaic production and installation country.

In 2019, China's installed photovoltaic power generation capacity reached 205 million kilowatts, accounting for 32.6% of the global total; in 2020, China's photovoltaic module exports reached 898 million pieces, an increase of 18.7% year-on-year. China has achieved a leading position and breakthrough progress in the photovoltaic field.

Moreover, Chinese photovoltaic companies do not rely on government subsidies or low-cost dumping of products, but rather on technological innovation and cost control to provide cost-effective photovoltaic products and services.

In 2019, the average cost of Chinese photovoltaic modules was $0.22 per watt, while the average cost of European photovoltaic modules was $0.38 per watt; in 2020, the average efficiency of Chinese photovoltaic modules was 19.5%, while the average efficiency of European photovoltaic modules was 18.2%. Chinese photovoltaic modules deeply explain what "high quality and low price" means.

Therefore, the EU's anti-subsidy policy on Chinese photovoltaic products is a self-defeating practice. It not only fails to effectively protect the European photovoltaic industry, but also hinders Europe's own green transformation and sustainable development, and does not prevent China from taking the lead and making breakthrough progress in this field.

Similar to the photovoltaic industry, the EU's anti-subsidy investigation into Chinese automobiles not only lacks rationality and fairness, but will also inevitably affect the current positive tone of cooperation between China and Europe, making Europe's already backward automobile electrification process even worse.

For example, in September 2022, Germany's Volkswagen and BYD signed a strategic cooperation agreement to jointly develop high-performance battery systems; in July 2023, Volkswagen Group announced an equity investment in Xpeng Motors, and the two parties plan to jointly develop two Volkswagen brand electric models for China's mid-size car market.

Prior to this, BMW and Geely cooperated to establish Beam Automotive, which specializes in the research and development and production of new energy vehicles; Mercedes-Benz and Great Wall also reached a cooperation agreement, Mercedes-Benz transferred half of the smart brand's equity to Great Wall, and established Smart Motor Automobile Company, which is responsible for the global operation of the smart brand.

Such cooperation is not only conducive to technological exchanges and market expansion between the two sides, but also conducive to promoting the green transformation and sustainable development of the global automotive industry.

In fact, Europe and the United States are not monolithic. There are reports that the anti-subsidy investigation on Chinese electric vehicles is likely to be influenced or pressured by France and other countries to damage Germany's advantages and cooperation opportunities in the Chinese market. Germany opposes this investigation.

This is because French car brands had already been defeated in China in the last round of competition with Japanese car companies, and almost no one is interested in them in the domestic market. German car brands have a large share of the Chinese market. If China takes countermeasures against this anti-subsidy investigation, the German auto industry will likely be hit hard.

However, the differences of opinion within the EU may be good news for China, and it also adds more variables to the anti-subsidy investigation. For the Chinese electric vehicle industry, there is no need to worry too much about this.

Based on past experience, the final outcomes of the EU's anti-subsidy and anti-dumping investigations on Chinese goods are similar.

Since 2010, the EU has launched several anti-subsidy investigations on Chinese products, involving multiple fields such as paper, communications, steel, transportation, etc. Among them, except for a few investigations in 2010 and 2013, most of them ended with the imposition of anti-subsidy duties. To put it bluntly, it is just asking for money, while leaving more room for survival for local car companies with backward technology and high costs.

However, even if faced with a certain degree of tax increase, considering the overall leading position of the domestic electric vehicle industry chain and the huge cost advantage, the specific impact on China's electric vehicle exports will still be limited.

It can be seen that Europe's anti-dumping and anti-subsidy investigations against China have shifted from low-end manufacturing such as paper and steel to high-end manufacturing for the first time, which undoubtedly means that China's firm path of industrialization and industrial upgrading in the past has been fruitful. With the pace of China's industrial upgrading, it may be inevitable that the main theme of trade between China and Europe will shift from cooperation to confrontation.

In short, the EU's anti-subsidy investigation on Chinese cars is a "commercial siege" that is doomed to fail. It is also an unfair and irrational trade protectionist practice that does not conform to market rules and international order, and does not fully respect the development and innovation of China's auto industry. This practice will not only fail to prevent China from having significant technological and cost advantages in the field of electric vehicles, but will also affect the current friendly cooperation atmosphere between the EU and Chinese automakers, and further slow down the process of electrification in Europe.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.