The European Union’s scrutiny of Chinese electric-vehicles has grown into a full-blown spat, introducing a fresh catalyst for the EV space and boding ill for EU-China relations more broadly.
Tesla,
the U.S. darling on the sidelines, could rise above it all.
China’s commerce ministry warned in a statement on Thursday that an EU probe into Chinese electric-vehicle subsidies is “naked protectionism” that “will have a negative impact on China-EU economic and trade relations.” Those bitter words followed European Commission president Ursula von der Leyen’s allegations on Wednesday that Chinese EV prices are kept “artificially low by huge state subsidies,” marking a distortion of competition that is unacceptable.
Chinese EV stocks
NIO
(ticker:
NIO
),
XPeng
(XPEV), and
BYD
(1211.China) fell on Wednesday’s news with NIO and XPeng’s U.S.-listed shares rebounding on Thursday. European auto stocks
Volkswagen
(VOW3.Germany),
Mercedes-Benz
(MBG), and
Stellantis
(STLA) initially rose on Wednesday and then fell on Thursday.
This subsidy spat looks like it is the latest catalyst that will shift European and Chinese names, at least in the short term.
And it makes sense. Legacy automakers are at the heart of Europe’s economy, and while Volkswagen is still the overall EV leader in the region, BYD is Europe’s single fastest-growing EV brand in 2023, according to Matthias Schmidt, publisher of the European Electric Car Report. China’s EV groups are growing the fastest in Europe of any national cohort, posing a clear threat to European business interests.
Tesla, which as a U.S. EV maker is on the sidelines, could rise above the feud. Both Europe and China are key markets for Tesla. The company holds almost 19% share of the European EV market, according to Schmidt, with the Model Y being the most popular EV in the region. China is not only a key manufacturing base for Tesla, but China’s wealthy consumers represent a critical growth market.
Shares in Tesla rose 1.4% on Wednesday and advanced a further 0.6% in the Thursday premarket. Maybe investors are taking note.
Write to Jack Denton at [email protected]
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