EU Launches Anti-Subsidy Investigation into BYD and Two Other Chinese Automakers
BEIJING, October 27 (TMTPOST) -- The European Union officially launched an anti-subsidy investigation into pure electric vehicles imported from China in early October. Given many companies were involved, the European Commission used a sampling method to select the target companies. A document obtained by Caixin on Wednesday revealed that BYD (002594.SZ / 01211.HK), SAIC Group (600104.SH), and Geely (00175.HK) were among those being investigated.
Starting from October 4, all new energy vehicle companies producing and exporting to the EU from China are required to submit questionnaires to the EU. The questionnaires include the quantity and value of pure electric vehicles exported to the EU and other regions from China.
In addition, the EU also seeks to collect information related to the supply chain, such as the names of suppliers of lithium, cobalt, nickel, battery cells, and more. This step is referred to as the "small questionnaire" in Chinese.
Based on practices in other industries, the EU is expected to select the largest exporters in the industry that submitted questionnaires and require them to respond to the investigation. This typically involves two to five companies and is known as the "large questionnaire" in Chinese.
Previously, industry experts saw SAIC Group, Tesla (NASDAQ: TSLA), eGT-NEV, Geely, and BMW Brilliance Automotive Ltd. (BBA) as potential subjects for in-depth investigation. eGT-NEV is a joint venture between Dongfeng, Nissan, and Renault in China. The final list did not include foreign-owned or joint-venture car companies.
An industry insider revealed that the EU's move was expected since they intended to investigate Chinese auto companies.
According to Cui Dongshu, Secretary-General of the China Passenger Car Association (CPCA), in the first eight months of 2023, MG, Polestar (NASDAQ: PSNY) and BYD were the top three Chinese brands exporting pure electric vehicles to the EU, with 68,815, 24,623, and 7,634 vehicles, respectively. MG is a brand under SAIC Group, while Polestar is a high-end electric vehicle brand jointly invested in by Geely Holding Group in Zhejiang province and Volvo Cars.
The investigation is expected to last for several months. Bai Yong, a partner at the Clifford Chance LLP, pointed out that the investigation would primarily take the form of questionnaires,
and if companies are willing to cooperate, EU Commission officials will conduct on-site inspections.
According to predictions by the Beijing Jingtian & Gongcheng Law Firm, the EU Commission will require sample companies to submit investigation questionnaires by November 17, 2023. In December 2023 and January 2024, the EU Commission will conduct on-site investigations into subsidies. The preliminary ruling will be announced in July 2024, and the final ruling will be published in November 2024.
According to the analysis of the firm, EU anti-subsidy investigations generally result in one of three outcomes: first, if no significant subsidies are found, the investigation will be terminated; second, if subsidies are found but they do not harm European car companies, no anti-subsidy measures will be taken; third, if evidence of subsidy and injury is found, anti-subsidy tariffs will be imposed. More than 90% of past cases of EU end with the third result.
The European Commission can impose anti-subsidy tariffs for five years, which can be extended for successive five-year periods following an expiry review.
