EU considers sanctions on Chinese EV manufacturers ⚡

6:37 PM 13 September 2023

Chinese electric car manufacturers today are performing poorly and recording declines as the EU looks to halt imports of cheaper cars from China, fearing a deepening crisis in European industry and a decline in the competitiveness of European companies. EU regulators have already launched an investigation amid fears of a flood of cheap 'electrics,' potentially creating a retaliatory reaction from China. As a result, shares of European car companies such as Volkswagen (VOW1.DE) and BMW (BMW.DE) also recorded mixed reactions today.The situation looks like a continuation of a certain 'geopolitical' puzzle in which the 'West' is limiting China's economic potential.

  • According to Ursula von Der Leyen's comments, China artificially lowers the price of cars through state subsidies and then exports them, creating unfair competitive advantages in the market. 
  • According to the data, the share of Chinese electric vehicle brands in the EU last year was 8%. With Chinese models about 20% cheaper than domestic ones, it is expected that by 2025 they could control 15% of the EV market.

In practice, of course, Europe doesn't want China to prove too attractive to consumers again, which would hit the sales and financial health of many automotive giants - perhaps even escalating to a wave of layoffs (a similar situation happened about 10 years ago when Chinese solar panels made European manufacturers uncompetitive).

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The share of Chinese EV sales is increasing year by year. Source: Bloomberg Finance L.P.

  • Following von der Leyen's announcement, European auto sector stocks initially rose on the prospect of a state umbrella, but then gave back gains. The potential sell-off was fueled by concerns about the reaction of China and European automakers, which have stronger exposure to the country.

Europe's largest automakers said earlier this month that they were concerned about the competitive threat posed by new Chinese companies as the auto industry transitions to a significant EV presence. Source: Bloomberg Finance L.P.

 The EV industry appears to be the future of the auto industry, so the battle for market share is likely to intensify. Source: Bloomberg Finance L.P.

Xpeng (XPEV.US) shares continue their upward trend - however, a potential saucer formation has been challenged by a second lower peak after a big rise in July. Source: xStation5

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