Title: German Media Discusses EU Subsidies for Electric Vehicles and Potential Trade War with China
Publication: Freiburg “Baden Zeitung”
Date: September 16, 2023
The German media is buzzing with discussions about the European Commission’s ongoing anti-subsidy investigation into Chinese electric vehicles and the subsidies provided by the EU itself for its own electric vehicle industry. As reported in the “Baden Zeitung,” the EU is also heavily subsidizing local electric vehicles.
The newspaper criticizes the idea of imposing punitive tariffs on Chinese electric cars in order to protect the local market. It argues that European car companies are struggling in the field of electric vehicles and need to focus on reducing bureaucracy and revitalize local industries, rather than resorting to trade protectionism.
The article warns that if the EU were to impose tariffs, it is likely that Beijing would retaliate, hitting German car companies the hardest as China is their most important sales market. It questions why the EU is not considering imposing punitive tariffs on American manufacturer Tesla, which has also benefited from government subsidies.
The German government itself has been providing significant subsidies for electric and hybrid vehicles for many years. German auto giants are currently investing in expensive high-end electric models, which can bring higher profits. The article argues that artificially raising the price of Chinese electric cars through tariffs would ultimately hurt ordinary consumers with less purchasing power.
In another publication, the “Frankfurter Allgemeine Zeitung” discusses the EU’s panic reaction to the surge in China’s electric vehicle market share. The article highlights that Chinese electric vehicles are not only cheaper but also of better quality than their European competitors. It warns that the EU’s anti-subsidy investigation into Chinese electric vehicles may inadvertently trigger a trade war with China, which would harm struggling German companies in the end.
The article suggests that while the EU cannot be naive in dealing with China, provoking a trade war on the grounds of subsidies would be careless. It emphasizes that the German industry, especially the automobile industry, heavily relies on market opening and access to the Chinese market. Trade protection measures are not the solution; instead, Europe should reduce bureaucracy, promote competition, and remain open to trade with other countries as well.
The Munich International Motor Show, which recently took place, witnessed a significant presence of Chinese car manufacturers alongside their German counterparts. Chinese brands, particularly in the electric vehicle segment, showcased their advancements and competitive pricing. German Foreign Minister Berbock even test drove an electric car from Chinese manufacturer BYD, symbolizing the growing competition between the old car world dominated by German manufacturers and the new car world represented by Chinese electric vehicles.
The increased participation of Chinese exhibitors highlights the growing influence of the country’s electric vehicle market. This presence has prompted discussions about the potential trade war between the EU and China and the need for the EU to prioritize revitalizing its own industries instead of resorting to protectionist measures.
As the discussions continue, it remains to be seen whether the EU will go ahead with imposing punitive tariffs on Chinese electric vehicles or explore alternative strategies to address the challenges posed by China’s rapidly growing market share in the electric vehicle industry.