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The European Commission president said that Brussels will launch an anti-subsidy investigation into Chinese electric vehicles that are “distorting” the EU market.
This investigation is centered around concerns that these subsidies may be causing market imbalances, particularly in relation to competitively priced Chinese electric vehicle models.
An article in the Financial Times suggests that this probe could become one of the largest trade cases initiated by the EU, aimed at preventing a situation similar to what occurred in its solar industry during the early 2010s.
According to Citi analysts, “Given EU only accounts for roughly 20-25% of total China export size, this shouldn’t pose big downside risk to overall exporting strategy of Chinese OEMs considering there are 195 countries in the world.”
Analysts at Morgan Stanley anticipate that this news will benefit automakers Renault (EPA:RENA) and Stellantis (NYSE:STLA) when compared to German OEMs, owing to their differing revenue exposures. Renault and Stellantis are directly exposed to potential competition in the European mid-segment SUV and Car categories, whereas German OEMs and premium players like BMW (ETR:BMWG), Mercedes-Benz (ETR:MBGn), and Porsche (ETR:P911_p) have a much higher reliance on unit sales in China. Consequently, they are more vulnerable to second-order effects such as potential backlash from Chinese policymakers targeting European brands with a substantial market share in China.
Shares of XPEV, NIO, and LI are down 3.21%, 3.60%, and 2.31%, respectively, in premarket trading Wednesday morning.
