“Global markets are now flooded with cheaper Chinese electric cars,” said European Commission President Ursula von der Leyen earlier this week. She was announcing that the EU will launch a probe into subsidies on Chinese electric vehicles (EVs) that she says keep prices “artificially low.” But even in an atmosphere where support for decoupling — or de-risking — from China is common, this is surely a terrible look.
The situation von der Leyen is describing is well known and widely covered. China manufactures around one-fifth of all EVs sold in Europe and since 2009 has targeted the industry with billions of dollars of subsidies and carefully arranged regulations. Furthermore, the trend is still increasing. Its leading EV manufacturer, BYD, has said that it is “confident” of doubling this year’s sales forecast to reach an export sales target of 400,000 units next year.
But while scientists are telling us that Earth is “well outside safe operating space for humanity” regarding carbon emissions, does the EU really want to be saying that making cheap electric cars is a bad thing?
Even if von der Leyden’s case was that market distortion was reducing efficiency within European EV manufacturing, it would be unconvincing. According to the U.N., “to keep global warming to no more than 1.5°C — as called for in the Paris Agreement — emissions need to be reduced by 45% by 2030 and reach net zero by 2050.” There’s simply no time for shuffling out existing success stories.
But von der Leyen’s argument wasn’t even that. She said very specifically: “We must defend ourselves against unfair practices (emphasis added).” Thus, at this moment in history, with the world simultaneously on fire and drowning, the president of the European Commission is using her State of the Union address to argue that the EU deserves a larger slice of the EV pie. Financially.
This is grim stuff. And while there is no public poll to gauge how it comes across, there are obvious indications that it doesn’t come across well. The Bloomberg Markets X (formerly Twitter) account that posted a video of the speech had received 161 responses at the time of writing and within them there was almost unanimous disagreement with the sentiment. Among many criticizing EU hypocrisy over its own subsidies, sample responses include: “what is wrong if Chinese provide cheaper cars?” (from user juma stephen @jumasteve). “One might be guilty of assuming that if you so desperately want an energy transition, that this would be welcomed” (from user Scott Newman @55magnus). “They are financing our decarbonization, where is the problem?” (from user JMO @JuanMartOrt).
The effect is essentially an open goal for China to paint the EU as a sore loser and as irresponsible on the climate. “Clearly, Europe is afraid. They are afraid of competition from China,” Chinese state media The Global Times wrote immediately after the speech. And why wouldn’t they?
This is a reversal of the EU’s position elsewhere, where it has managed to enhance its own competitiveness while also appearing to take the high ground on the climate. Its Carbon Border Adjustment Mechanism [CBAM] import tariff on carbon-intensive goods from abroad, currently in a trial period, is designed to match the price already imposed on carbon emissions for goods made within the EU. Some believe that, long term, it may push Chinese companies to move away from coal and increase their use of renewable energy. “Even the threat of the CBAM has increased ambition in lots of countries, so in that respect you could consider CBAM to be already working in raising the bar in terms of ambition,” Josh Burke, senior policy fellow at the Grantham Research Institute on Climate Change and the Environment told me earlier this year. It gives EU industries an advantage, but it does so by directly pushing for lower carbon emissions.
There are still those who don’t have faith in that policy, and companies like Apple will push the cost of their zero carbon transition down the value chain to their providers. But nevertheless, that remains a very different look to the EU complaining about electric cars being too cheap — and surely the better direction to go in, both morally and strategically.
Image: Dati Bento, European Commission
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