The European Union’s investigation into subsidies for China-made electric vehicles (EV) exported to Europe could do more harm than good, BMW’s chief financial officer said on Friday, warning of a potentially big backlash from Beijing.

Walter Mertl said he did not endorse punitive tariffs and the investigation would shield those who do not have significant sales in China but would impact every carmaker doing business there.

“The backlash, like a boomerang, can be bigger than what one imagined,” he said, referring to potential retaliation by China on European carmakers.

China is the biggest market for Germany’s three top carmakers. BMW exports the iX3 from China to Europe and will export the Mini from next year, leaving it vulnerable to possible EU tariffs on imports from China as well as any backlash from China on its sales in the country.

While 90per cent of BMW cars sold in China are produced locally, some materials are shipped from Europe to China, Mertl said.

China has condemned the EU investigation, which formally began on Thursday, as out of line with World Trade Organization rules and detrimental to the global growth of EV sales.

Speaking ahead of BMW’s third quarter results early next month, Mertl said the company would be able to present “good numbers” in line with its raised forecast for a 9-10.5per cent margin on earnings before interest and taxes.

Asked whether the premium carmaker was seeing dampened demand for EVs reported by Volkswagen in recent weeks, Mertl said EV sales were rising and the company was on track to hit its goal of 15per cent fully-electric sales for the year.

Some supply chain problems in logistics and transport persisted and could carry on for the next six months, he added.