The EU is preparing new requirements for Chinese automakers to be eligible for local subsidies, including the following: — presence of production facilities in Europe and transfer of intellectual property «».
Two high-ranking EU officials with whom I spoke Financial Times the new requirements will be presented for the first time in December, along with a call for grants of up to €1 billion for the development of new batteries (but may later be extended to other subsidy schemes).
In fact, the new criteria effectively duplicate Beijing’s decision to require foreign companies to share intellectual property in exchange for access to the Chinese market.
As a reminder, in October, the European Commission approved a 35% tariff on imported Chinese electric vehicles — in addition to the 10% tax already in place. Similarly, stricter hydrogen subsidy requirements were introduced, stipulating that only 25% of electrolyzer parts could come from China.
The Financial Times’ interlocutors emphasize that re-elected US President Donald Trump «will put pressure» on the EU to follow America’s lead and erect more barriers to Chinese goods and investment. Allegedly, if he continues to threaten to impose a 60% duty on Chinese exports, Beijing will try to redirect the goods to other regions, including Europe.
Stricter controls on Chinese technology imports to the EU have already encouraged companies such as China’s CATL to set up gigafactories in Europe — billions of euros have already been invested in plants in Hungary and Germany. Shanghai-based Envision Energy is also investing hundreds of millions of euros in facilities in Spain and France. Meanwhile, Sweden’s own «EU battery champion Northvolt is teetering on the brink of bankruptcy as it struggles to meet production targets.
Batteries account for more than a third of the cost of electric vehicles, making these supply chains critical to the European automotive industry as it tries to shift to less polluting models. At the same time, Elizabeth Cornago, a senior fellow at the Center for European Reform, says that a tougher stance on Chinese components could have negative consequences for the EU’s decarbonization efforts.
«You temporarily establish trade protection in the form of support for innovation…to support the industry, but it doesn’t lower prices for consumers,» Cornago notes, adding that the latest demands could «add to the confusion about what the EU’s auto sector needs to do to grow and compete with China.