Italy to hold back tide of Chinese EVs

THE Italian government is reportedly working to introduce new incentives for vehicle purchases that would factor in carbon emissions across the manufacturing and distribution process as a means of protecting its industry against cheap Chinese imports.

According to a report published by Reuters this week, the incentive-based scheme will be modelled on a recently implemented French policy and has the potential to discourage purchases of cheaper Chinese-made electric vehicles, imports of which are increasing in Europe.

Like the French program, EVs sourced against government-set thresholds for the amount of energy used to produce their materials, in their assembly and transport to market, as well as what type of battery they have, will be made ineligible for incentives.

Although European Union competition rules do not allow countries to favour local producers, the French scheme was passed because of exemptions allowed for health and environmental reasons.

The report says Italy is aiming to agree to a broad, long-term plan for its automotive industry with all local relevant groups, including Stellantis  (Italy’s largest automotive producer), with the government “pushing for it to bring its annual production in the country back to one million vehicles (per annum)”.

Italian industry minister, Adolfo Urso, said last month that Italians had used 80 per cent of the (green vehicle) incentives to buy vehicles produced abroad, and that a revision of the incentive framework should support both a shift to more environmentally friendly vehicles and national car (production) output.

Mr Urso told Reuters that the Italian government is expected to set up a new incentive plan, while pushing for Stellantis to bring its annual output in the country back up to one million vehicles.

Stellantis produced fewer than 700,000 vehicles in the country last year.

Last month, EU Commission president, Ursula von der Leyen, said global markets are “flooded” with cheap Chinese cars, announcing a probe into the investigation into subsidies for Chinese-made electric vehicles.

“Their price is kept artificially low by huge state subsidies,” she remarked.

“This is distorting our market, and as we do not accept this distortion from the inside in our market, we do not accept it from the outside.”

The probe is being opened despite fears of retaliation from China and is reported to be symptomatic of growing alarm over the ability of European manufacturers to compete with China’s industry.

Chinese vehicle manufacturers are preparing to increase sales in Europe (and elsewhere) with a range of competitively priced EVs aimed at challenging established marques.

According to a recent Bloomberg report, the European Union is particularly concerned about China’s economic practices, calling on the Chinese government to rebalance bilateral trade relations and put in place new instruments to address coercive practices.

Last month, French finance minister, Bruno Le Maire, said tougher measures were needed to protect European industry.

“We now need a European industrial strategy that is much more proactive, much more innovative, (and) much more protective of our industrial interests in relation to China and the US – there is not a day to lose,” he stated.

German economy minister, Robert Habeck, welcomed calls to take action against the importation and sale of Chinese-made electric cars, saying, “This is about unfair competition, it’s not about keeping efficient cheap cars out of the European market – we must of course take action”.

The head of the European Automobile Manufacturers’ Association, Sigrid de Vries, said urgent consideration must be given to what she called distorted competition in the sector.

“China’s apparent advantage and cost-competitive imports are already impacting European auto makers’ domestic market share, with a massive surge in electric vehicle imports in recent years,’ she said.

“At the same time, the US Inflation Reduction Act is also a game-changer in the electric vehicle value chain.

“European Commission president von der Leyen’s announcement is a positive signal that the European Commission is recognising the increasingly asymmetric situation our industry is faced with and is giving urgent consideration to distorted competition in our sector.”

As reported by GoAuto Premium earlier this year, more than three-million vehicles were exported from China last year, a rise of 54 per cent on 2021, with the UK and Belgium being the top global destinations (Belgium is a key distribution hub for greater Europe).

Data from the China Association of Automobile Manufacturers (CAAM) shows that 3.092 million finished vehicles were exported from China in 2022, 21.8 per cent of which were new energy vehicles (hybrid, battery electric, plug-in hybrid, and fuel cell hybrid).

With Bloomberg, Reuters, Automotive News Europe, and GoAuto Premium.