Chinese electric vehicle company stocks, including XPeng Inc XPEV, NIO Inc NIO, and Li Auto Inc LI, are trading lower Wednesday after Brussels shared plans to launch an anti-subsidy investigation into Chinese EVs that are "distorting" the EU market.
European Commission President Ursula von der Leyen announced during her annual address to EU lawmakers, expressing concern over the influx of cheaper Chinese EVs into global markets, Financial Times reports.
The investigation comes after months of planning and reflects the EU's concerns about China's practices in the EV trade.
European firms have often faced exclusion from foreign markets and unfair competition due to substantial state subsidies given to competitors. Von der Leyen conveyed these concerns to Chinese Premier Li Qiang during a bilateral meeting at the G20 summit in New Delhi.
EU member states, including France, demanded the probe to protect domestic carmakers from losing their market leadership in the EV sector.
The manufacturers, if found guilty, could face punitive tariffs. The EU is taking this proactive stance to prevent a repeat of the solar industry's past issues when Chinese imports led to insolvency among European photovoltaic manufacturers.
EU Trade Commissioner Valdis Dombrovskis will likely visit Beijing in the coming week, indicating ongoing discussions about trade practices and competition.
European carmakers have raised concerns about Chinese imports, citing lower energy and labor costs as giving Chinese models a competitive advantage.
To counter this, some European carmakers are considering building more affordable EVs outside Europe and importing them to compete with Chinese counterparts.
While Chinese car brands held less than 1% of the EU market in 2021, their market share has grown to 2.8% in 2023. In the EV segment, Chinese manufacturers account for 8% of vehicles sold.
In addition to the anti-subsidy investigation, von der Leyen announced measures to improve financing access and auction systems for the wind industry, which faces similar competition challenges from China.
The EU seeks to strengthen its economic security in response to China's measures, including export controls on critical metals.
Price Actions: XPEV shares traded lower by 2.95% at $18.09 premarket on the last check Wednesday. NIO shares traded lower by 2.08% at $10.35, and LI shares traded lower by 2.68% at $39.61.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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