China is cutting expansion in its electric vehicle sector, officials saying there isn’t enough external consumer demand and they will take, quote, “forceful measures” to stop construction of EV projects. To break this down for us, we have Yahoo Finance reporter, Ines Ferre. Hey Ines.
And the vice minister of Industry and Information Technology said Beijing is going to take forceful measures, as you just mentioned, to address blind construction of EVs citing disorderly competition behaviors.
Now, the comments come after China’s EV production has basically eclipsed other countries, making it a trade war focus between Beijing and Western nations. Now, last year, EU regulators launched an investigation into the Chinese EV industry amid concerns that the Chinese companies represented a threat to German, French, and Italian automakers.
European carmakers point to Chinese subsidies, they point to bank lending as the reason why Chinese manufactured cars have gained so much market share. Now, this follows a similar pattern when it comes to steel, when it comes to aluminum, also solar panels. Industry leaders and Western nations have said– they’ve long complained about unfair competition stemming from cheaper Chinese products squeezing out these foreign competitors.
The recent comments out of China are seen as a bit of an olive branch in the ongoing trade war and also a way to prevent price wars because when you have so much competition, this creates price wars and everyone starts slashing their prices. We’ve already seen some of this.
However, the Chinese official also criticized the West protectionist behaviors. Now, keep in mind the US, for example, has passed legislation giving credits for EVs made in the US or parts of the components of those EVs and metals extracted by US or its allies for EV batteries, a market which China dominates.
Look, BYD, the Chinese EV maker took Tesla’s crown as top EV maker in the fourth quarter, selling more battery-powered vehicles than its US rivals. So Europe and other nations are saying, hey, please stop.
