Chinese leader Xi Jinping and French President Emmanuel Macron are swooping around France surrounded by buzz over trade disputes that could reset the future of Europe’s EV industry.
Under pressure from European automakers, European Union officials have threatened to jack up tariffs on Chinese-built EVs. The EU has broader concerns with Chinese clean technology producers dumping their products into Europe to support excess capacity at home.
France has slashed subsidies available to Chinese EVs, a move that slammed the brakes on demand.
But China has threatened it will counterpunch by slapping prohibitive duties on French brandy, leaving cognac producers swimming in their own liquor.
There are more issues on the table between China and France, to be sure. But the outcome of EU-China trade diplomacy could shape the futures of both the European and Chinese auto industries.
Macron has set an ambitious goal to increase domestic EV production four-fold. A torrent of low-cost Chinese EVs puts that goal and the jobs that go with it at risk.
On the other side, Chinese EV producers such as BYD and Tesla – yes, Tesla – are leaning on exports to Europe and other markets to generate profits while they fight a bruising price war at home.
Potential job-creating investments in Europe by Chinese EV and battery makers are a wild card. EU nations that land factories built by Chinese firms – and countries such as Germany that rely on the Chinese market – will have a different take on building trade barriers than those that don’t.
