EU announces an investigation into Chinese subsidies for electric vehicles

The European Union is launching an investigation into subsidies that China provides to electric vehicle makers, the head of the bloc’s executive branch said Wednesday, as concern grows that the aid is harming European companies.

“Global markets are now flooded with cheaper Chinese electric cars, and their price is kept artificially low by huge state subsidies. This is distorting our market,” European Commission President Ursula von der Leyen told EU lawmakers in Strasbourg, France.

“As we do not accept this distortion from the inside in our market, we do not accept this from the outside,” von der Leyen said. “So, I can announce today that the commission is launching an anti-subsidy investigation into electric vehicles coming from China.”

China’s leaders have helped make the country the biggest market for electric vehicles by investing billions of dollars in subsidies to get an early lead in what is seen as a promising industry.

Global automakers face growing competition in their home regions from Chinese brands that are taking market share.

Electric vehicle makers including BYD Auto and Geely Group’s Zeekr unit began sales this year in Japan and Europe. Geely also owns Sweden’s Volvo Cars and its all-electric luxury brand, Polestar.

“Europe is open to competition but not for a race to the bottom. We must defend ourselves against unfair practices,” von der Leyen said. She did not provide details about the investigation.