China's Commerce Minister to Advocate EV Sector in Europe Amid Subsidy, Tariff Probe

China's Commerce Minister Wang Wentao is set to visit Europe in April to address concerns and advocate for the Chinese electric vehicle (EV) industry amid a European Commission investigation into alleged unfair subsidies.

Wang will travel to France, according to a French government source and two other people familiar with the plans. The French trade ministry did not immediately respond to requests for comment, as per Reuters.

The Commission has launched an investigation to determine whether tariffs on exports should be levied to protect European automakers. It is scheduled to conclude in November, though the EU executive may impose provisional duties sooner.

The Commission's spokesperson did not comment on bilateral engagements between EU Member States and third countries. According to the Commission, China's share of EVs sold in Europe could reach 15% by 2025, owing to their lower cost than European-made battery-powered vehicles.

China has disputed that subsidies have boosted its EV industry, labeling the EU investigation "protectionist." Analysts say that China's dominance of the battery supply chain, innovation, and fierce competition in a crowded domestic market have all contributed to lower prices.

Reuters reported that European Commission investigators inspected Chinese automakers earlier this year as part of their investigations. According to people involved in the process in January, those inspections targeted market leaders BYD, Geely, and SAIC.

High-Level Chinese Delegation to Discuss Trade and Business in France and Italy Amid EU Tensions

Wang will visit France beginning April 7 and will be accompanied by representatives from BYD, SAIC, and Geely, the companies that have previously hosted Commission investigators, according to one person familiar with the trip.

Wang will also attend a China-Italy business forum in Verona, Italy, on April 12 with Foreign Minister Antonio Tajani, according to the Italian government. Trade tensions between the EU and China are expected to be discussed more broadly when Chinese President Xi Jinping visits France in May.

France has backed the Commission investigation, which was part of President Emmanuel Macron's years-long campaign to toughen trade rules and ensure a level playing field.

China's Ascendancy in Global Car Exports Amid Trade Tensions and Market Dynamics

In 2023, China became the world's largest car exporter, surpassing Japan, a trend analysts say reflects China's massive overcapacity in production given the size of its domestic market.

Popular Chinese models exported to Europe include SAIC's MG and Geely's Volvo. Tesla is also a major EV exporter to Europe, with its Shanghai factory being the company's largest and most productive facility.

China could produce 43 million vehicles per year, including gasoline-powered vehicles, by the end of 2022. Still, according to data from the China Passenger Car Association, its plant utilization rate - a measure of profitability - was just under 55%.

For months, executives at Chinese automakers, suppliers, and analysts have privately discussed and modeled the risk of additional tariffs on Chinese-made EVs exported to Europe. Chinese EVs already face a 10% tariff in the European Union.

In the United States, Chinese-made EVs have been barred from entering due to 27.5% tariffs and a package of federal consumer incentives under the Biden administration that they do not qualify for as imported goods. Some US lawmakers have advocated for higher tariffs.

Chinese automakers have announced plans to increase production in foreign markets, partly in response to the backlash against exports. Carmakers Stellantis and Renault and French cognac companies Remy, Pernod Ricard, and LVMH did not immediately respond to inquiries about the trip. The French car and brandy associations were also not immediately accessible.

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