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Chinese electric cars may come under scrutiny in the UK

Awaiting government or industry request

The UK’s Trade Remedies Authority (TRA) says that it stands ready to investigate the business practices of Chinese car makers, as those brands start to gain a foothold in the car market.

The likes of BYD and MG (originally a British brand but owned by China’s SAIC since the collapse of MG Rover in 2004) have started to make significant inroads into the UK car market. MG’s HS model, a plug-in hybrid, is currently the fourth best-selling car in the country.

However, concerns have been raised, especially at the European level, of Chinese companies leveraging their government-backed financial muscle to effectively sell their cars at a loss, or at least at a minimal profit, to drive European and British car makers (not to mention American, Japanese and Korean firms) to the wall.

Last year, the EU launched a major investigation into Chinese car makers, trying to ensure that no such price-dumping is taking place. So far, the British government has not yet asked the TRA to match the European investigations, but the head of the authority, Oliver Griffith, said in an interview with The Guardian, that the TRA is “ready to go if anyone does come to us.”

Griffiths further told The Guardian that, far from inaction, the TRA is keeping an active eye on the electric car market, to be prepared if a ministerial request or a request from car manufacturers is submitted.

“We haven’t had either of those two things happen on electric vehicles. But I know people are watching it really closely,” he said. “We’ve been in close and regular contact with the industry on this one, and lots of people are looking at the import numbers.

“Similarly, I know government have a fairly close watching brief on this one. All eyes will be on Brussels later on this year when they could potentially bring out an interim measure on this.”

EU investigation under way

The EU’s “anti-subsidy investigation” was launched last October.

Ursula von der Leyen, president of the European Commission, said: “The electric vehicle sector holds huge potential for Europe’s future competitiveness and green industrial leadership. EU car manufacturers and related sectors are already investing and innovating to fully develop this potential. Wherever we find evidence that their efforts are being impeded by market distortions and unfair competition, we will act decisively.

“And we will do this in full respect of our EU and international obligations — because Europe plays by the rules, within its borders and globally. This anti-subsidy investigation will be thorough, fair, and fact-based.”

Sam Low, an analyst with Flint Global, has written that eventually trade barriers to such cheaply-produced Chinese electric cars are inevitable.

“Chinese state-backed investment in the sector has transitioned the country from a net importer to a fast-growing net exporter of finished vehicles,” Low said. “On a comparative basis, the EU is among the most open markets for Chinese firms trying to get a footprint abroad. With its ten per cent tariff, the EU is relatively more attractive to Chinese car exporters than, say, the US which has a 27.5 per cent tariff, and exclusion from Inflation Reduction Act derived consumer subsidies; Turkey with its 50 per cent tariff, and Indonesia, which directly conditions market access on investment in local production.

“But this will soon change. Last October, the European Commission instigated an anti-subsidy investigation into imported China-originating electric vehicles. The investigation will probably result in new tariffs, provisionally initiated, before the European Parliament election in June this year.

“Where the EU moves, the UK usually follows. While the UK government and industry are currently publicly reluctant to replicate the EU measures, this will probably change once China-originating cars originally destined for the EU turn up in observable quantities on British driveways.”

France already putting measures in place

France has not hung around waiting for the EU to complete its investigations. The Elysee Palace recently restructured the rules governing its electric car purchase grants, and those rules effectively exclude Chinese cars. The move allegedly triggered a tit-for-tat response from Beijing which began investigations into the import of luxury French goods, including brandy.

A government spokesperson told The Guardian: “UK car manufacturers have not discussed their concerns with the TRA or requested an investigation into electric vehicle imports from China. We’re firmly backing our auto industry with £2bn of capital and R&D funding to 2030, Tata’s investment of over £4bn to build a new gigafactory and Nissan’s £2bn EV investment in Sunderland that will create jobs and opportunities across the country.”

There is, of course, the issue that many European car makers are already thoroughly in bed with their Chinese opposite numbers. BMW has just launched the latest generation of the Mini hatchback in electric form, which will be built initially in China in a factory established as part of a joint venture with Great Wall Motors, and will use a chassis, battery and electric motors co-developed with Great Wall.

It will be at least another year before the new electric Mini will be built in Europe, at the firm’s factory in Oxford, alongside its combustion-engined brothers.

European car makers not pushing the agenda

Equally, both Volkswagen and Audi have recently announced tie-ups with SAIC (owners of MG) and XPeng to use their platforms and batteries for future electric models, to chop development times and bring new electric products to market much more quickly.

The move could also affect Tesla, which imports many Model 3 and Model Y cars to Europe from its factory in Shanghai.

Several European car makers have expressed concerns about investigations into Chinese practices, not least because any potential trade barriers could mean a reciprocal response from China, which is currently the world’s biggest car market. Renault Group CEO, Luca De Meo, has said that any such tariff-based messing about is pointless and that all should be allowed to compete.

BYD Dolphin rear

BYD, the giant Chinese company which recently overtook Tesla as the world’s biggest maker of EVs has already announced a method by which it hopes to side-step any trade restrictions: to build a factory in Europe. That factory will be built in Szeged, Hungary, and BYD is saying that it expects to create thousands of jobs in the area.

BYD has already launched five models in the European car market, and three in the UK, and not only does it expect to launch three more new models this year, it also has plans to start selling its premium YangWang brand here too.

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