“Mom… those Turks!”. This time, however, the “invaders” have almond-shaped eyes and, instead of brandishing sharp scimitars, they are ready to conquer Europe with their electric cars, more competitive than ever. For this reason, the Italian Government would be ready to launch protectionist measures to the detriment of “Made in China” cars, along the lines of what France has done and what the EU could do. The issue is very complex and it is worth examining the fundamental aspects. The first is that the Chinese have almost total control of the resources necessary to build the accumulators, the heart of the cars on tap, regardless of their passport. Furthermore, most batteries for electric vehicles are built in the People’s Republic, where, moreover, labor costs are lower, manufacturers do almost everything in-house and the State strongly supports the national industry.
As you might imagine, it’s all a question of competitiveness: for example, BYD, the best-selling car brand in China, has a 25% cost advantage compared to North American and European brands. Which gives the Shenzhen company ample firepower to undermine rivals on Chinese soil while expanding globally, also thanks to huge subsidies from the Chinese government. Not only that, there is an almost unparalleled value chain at stake. Let’s consider the BYD Seal: 75% of the components of this electric sedan are produced internally by the company. A percentage double the world average, which contributes to understanding the manufacturer’s strong position in terms of production costs and control of completely integrated component supplies. Only 10% or less of Seal’s components come from foreign suppliers. “The global auto industry will undergo ‘seismic’ changes in the next 10 years,” says Paul Gong, an analyst at UBS Group, who has compiled a report predicting that the global market share of Western automakers will fall from 81% to 58%. by 2030. “It would be a time of crisis for Western companies,” says Gong.
Numbers which (perhaps too late) have alerted European politicians. The first to move, under French pressure, was Ursula von der Leyen, who announced an anti-dumping investigation into electric cars produced in China: “Too often our companies have to face competition from heavily subsidized foreign operators”, she said. said the president of the European Commission during a very recent summit on the Green Deal held in Prague: “Think of the automotive industry. Czech manufacturers are investing heavily in new lines of electric vehicles, but at the same time global markets are flooded with low-cost Chinese cars. And their price is kept artificially low by huge state subsidies. This is why we are launching an anti-dumping investigation (“dumping” is a form of unfair competition because products are sold at a price that does not accurately reflect the cost of production; a price that may also be due to the presence of subsidies state to companies in the country of origin, ed.) on electric vehicles from China. European companies will always be ready to face competition, competition on cost efficiency and quality. But such competition must be fair. And we will protect European companies from unfair ones.”
So what is happening in our house? According to rumors reported by Reuters, in Rome they are thinking of reshaping the incentives for the purchase of electric cars which favors continental ones to the detriment of Chinese ones. In fact, if it is true that electric cars produce zero local carbon dioxide emissions, it is also true that they have a strong environmental impact during the production phase, mainly linked to the methods of energy production (in China electricity production is still very dirty”). In other words, the new incentives would take into consideration not only the nature of mechanics as a sustainability parameter but also the carbon dioxide emissions in the entire life cycle of cars: a calculation that would also include the pollutants resulting from the production process as well as the subsequent distribution of electric vehicles. A similar policy has already been implemented by France: beyond the Alps, in fact, cars which, in order to be imported, must cover enormous distances by sea or which are assembled using energy obtained from fossil sources are heavily penalised. In practice, Chinese cars are penalized in France, excluded from purchase incentives. As can be guessed, Paris’ desire is to protect its automotive industry as much as possible, which includes Stellantis and Renault.
But let’s return for a moment to the aforementioned “dumping” issue: if the announced European investigation recognizes unfair competition policies on the part of Chinese manufacturers (the investigation of any violations will take around a year to complete), further duties could result customs duties on cars produced in China. The same, however, could have repercussions on the German automotive industry, which is heavily dependent on the dynamics of the Chinese car market (which is the first in the world and absorbs almost 40% of the Volkswagen group’s production). The French, automotively speaking, do not have the same commercial interests as the Germans in the Land of the Dragon. For the Germans, however, the issue is extremely delicate: China, in fact, in addition to absorbing a large part of Made in Germany exports, is among the main destinations for foreign investments. In Berlin, therefore, they tremble at the idea of a trade war with the People’s Republic, which would risk threatening the presence of German manufacturers in China as well as their already declining weight on the local market. The investigation, it is worth underlining, will also concern electric cars produced in China and exported to Europe by Western manufacturers: a hypothesis that aggravates the concerns of German politicians.
Meanwhile, the knives are sharpening in China: the European anti-dumping investigation “is a pure protectionist act, which will seriously disrupt and distort the global automotive industry and the supply chain (it is worth remembering that the People’s Republic has the undisputed monopoly of raw materials needed to build batteries and is, by far, the largest producer of accumulators, ed.), including the EU, and will have a negative impact on China-EU economic and trade relations,” he recently said in a statement China’s Ministry of Commerce: “China will pay close attention to the EU’s protectionist tendencies and follow-up actions, and will firmly protect the legitimate rights and interests of Chinese companies.” In short, the issue of the electric car has evidently become a political match between superpowers, which pits the Chinese giant against a Europe made up of actors who have quite heterogeneous strategic interests. Unfortunately, the impression is that in Brussels the social and economic consequences of a green reconversion of mobility have been underestimated which, moreover, exposes the continent both to internal conflicts and to a potential trade war against Beijing.