The European Union is planning to introduce subsidies across the EU to support the electric vehicle (EV) industry. This move aims to bolster the struggling European automotive sector and stimulate demand, particularly in the face of competition from low-cost Chinese products infiltrating the local market.
At the World Economic Forum in Davos, Vice President of the European Commission, Teresa Ribera, emphasized the importance of unified EU policies to avoid competitiveness between member states. She stated that developing a pan-European subsidy plan is more meaningful than relying on individual country measures. German Chancellor Olaf Scholz disclosed that the EU is considering the subsidy plan he proposed, following a significant decline in electric vehicle sales in Germany after domestic subsidies were halted.
Currently, there are significant disparities in electric vehicle subsidy policies among EU member states, with some countries offering no subsidies at all. The EU also faces challenges in designing subsidy plans that comply with World Trade Organization (WTO) rules while preventing subsidies from benefiting rapidly expanding market shares of Chinese car manufacturers.
Ribera highlighted the need for the European automotive industry to enhance production capacity to meet global demand, with the subsidy plan being one of several measures to support the sector. Meanwhile, U.S. President Donald Trump has vowed to end “unfair subsidies” for electric vehicles, taking a contrasting stance to the EU.
Last year, the EU imposed tariffs as high as 45% on electric vehicles subsidized by the Chinese government, leading to Beijing’s threats of tariffs on European brandy and pork products.
In addition to the automotive sector, the EU is considering implementing other protective measures, such as introducing local capacity requirements to support European wind turbine manufacturers. Furthermore, investigations into China’s discriminatory procurement of medical devices have revealed unfair practices against EU companies in public procurement, potentially prompting the EU to impose restrictions to prevent Chinese firms from entering the European market.
These policy adjustments demonstrate the EU’s determination to address external competition in key sectors such as automotive and renewable energy, while striving to promote green economic transformation.