Choosing the lesser of two evils: EU's probes on Chinese EV, solar panels

Nuying Huang, Taipei; Peng Chen, DIGITIMES Asia 0

Credit: AFP

Following an anti-subsidy investigation on China-made EVs launched in 2023, the European Union is reportedly considering resuming the anti-dumping and anti-subsidy probes on Chinese photovoltaic (PV) panels.

PV manufacturers said the bloc is unlikely to restart the investigation. Automotive suppliers said the EU is determined to protect the local car industry through the act.

Sources suspected that the EU would not be willing to resume the probe on Chinese solar products because cheaper products can benefit green energy adoption. In addition, since Europe only has limited R&D capabilities in the PV industry, it would not want to restart a trade war.

Europe imposed trade barriers on China-made PV panels between 2012 and 2018. The move did not help the lagging local solar manufacturers. China's revenge also impacted the interests of other European industries.

The European Commission recently launched investigations into China-based Longi Green Energy Technology and Shanghai Electric Group. Both companies participated in a project to build a 110MW photovoltaic park in Romania. According to Euronews, the Commission suspected that the two Chinese companies won the public contracts with excessive subsidies.

Suppliers said Chinese companies dumped their low-priced PV modules stocked at ports across Europe in 2023, significantly impacting competitors in Europe and other regions. The market is expected to return to normal in the second quarter of 2024.

The European PV market is still promising, sources said. The EU is loosening land restrictions to enable more PV panel installations, which will facilitate demand growth in the coming years.

Auto industry is the home turf that EU must protect

The EU might not have intended to resume probes on Chinese solar products, but it continues with the EV investigation. Those who support the move said it will protect the competitiveness of the bloc's automotive industry.

People opposing the probe said 30% of Europe's annual automotive revenue is generated in the Chinese market. Local carmakers like Audi, BMW, and Mercedes-Benz focus on premium models and will not be affected by China's affordable cars in the short term.

Those against the investigation also said Chinese EVs would satisfy European consumers' needs for low-priced vehicles, a segment that local automakers are unlikely to catch up shortly. However, Stellantis has launched an EV priced around EUR25,000 (US$27,250) and succeeded in the first quarter of 2024.

Automotive suppliers said the car industry is critical to Europe's economy, which explains why the EU takes a strong stance on Chinese EVs. European vehicles will also be more competitive than its PV panels.

Given the situation in the solar industry, the EU will take a different approach to protect its automotive sector. For example, all EV and industrial batteries over 2 kWh sold into the EU market will require a battery passport with material source and other information. In addition, proposals have been made to impose carbon taxes on EVs imported from China because much of the production relies on coal-generated power.

Even though the EU has taken active measures to protect its car industry, several rounds of layoffs occurred across the supply chain in 2023 due to automotive electrification and the economy. Tier-1 suppliers like Bosch, ZF, and Continental have reduced their workforce.