BEIJING — Europe has launched an investigation into Chinese language electrical automobile subsidies, however no assumptions needs to be made concerning the probe’s consequence, the top of commerce for the European bloc’s government department stated Tuesday.

About two weeks in the past, the European Fee introduced an investigation into authorities subsidies for EV makers in China.

The probe focuses on subsidies for electrical automobile manufacturing, and will probably be “fact-based,” Valdis Dombrovskis, government vp and commerce commissioner of the European Fee, instructed reporters Tuesday. He was talking in Beijing after a four-day journey in China.

The investigation will probably be in step with EU and World Commerce Group guidelines, and contain engagement with Chinese language authorities and companies, he added.

“The end result of investigation goes to be decided by these … [I] can’t prejudge the end result of the investigation,” Dombrovskis stated.

China’s electrical automotive exports have surged in latest months. When contemplating exports of all varieties of vehicles, China’s have already surpassed Germany’s, and are on observe to surpass Japan’s this 12 months as the most important automotive exporter globally, in response to Moody’s.

Homegrown Chinese language electrical automotive firms Nio, Xpeng and BYD are amongst those who have began to increase to Europe, however in comparatively small numbers up to now. Greater than two-thirds of China’s electrical automotive exports to Europe have been from Tesla and different worldwide manufacturers manufacturing in China, in response to HSBC.

Nonetheless, the long run penalties for enterprise are nice.

Dombrovskis famous the EU plans to part out gross sales of inside combustion engine vehicles by 2035. He additionally stated the share of Chinese language EV manufacturers within the EU market has gone from lower than 1% to eight% within the final two or three years.

The opposite ingredient of the EU’s subsidy probe is “danger of harm” for the European auto trade, he instructed reporters.

European auto giants reminiscent of Volkswagen derive vital gross sales from China however have struggled to penetrate the extremely aggressive electrical automotive market there. Earlier this 12 months, VW and EV startup Xpeng introduced a strategic partnership via which they’d collectively develop vehicles for the Chinese language market.

China’s Ministry of Commerce was fast to criticize the EU investigation and known as it a “blatantly protectionist act” that may distort the worldwide auto trade.

Cui Dongshu, head of the China Passenger Automobile Affiliation, additionally stated in a web-based publish that China’s new vitality automobile exports are rising due to a extremely aggressive home provide chain and market setting.

On Tuesday, Dombrovskis instructed reporters that the EU probe into EV subsidies was raised in just about each assembly together with his Chinese language counterparts.

China’s electrical automobile ambitions began properly over a decade in the past. Former Audi engineer Wan Gang turned China’s Minister of Science and Expertise in 2007 and satisfied the central authorities to roll out a nationwide technique for creating new vitality autos and battery know-how.

Between 2009 and 2015, the central authorities spent at the very least 33.4 billion yuan ($4.57 billion) in subsidies on creating electrical autos, in response to the Ministry of Finance. Beijing has tended to lump EVs into the broader class of latest vitality autos.

The federal government-led push was not with out waste. In 2016, the Ministry of Finance stated it discovered at the very least 5 firms cheated the system of over 1 billion yuan. 

The nation’s more moderen electrical car-related subsidies have targeted on tax breaks for shoppers. Electrical vehicles are thought of one of many brilliant spots in China’s slowing financial system, and a driver of superior manufacturing, retail gross sales and exports.

— CNBC’s Clement Tan contributed to this report.