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

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

The probe focuses on subsidies for electrical car manufacturing, and might be “fact-based,” Valdis Dombrovskis, government vice chairman and commerce commissioner of the European Commission, instructed reporters Tuesday. He was talking in Beijing after a four-day journey in China.

The investigation might be in step with EU and World Trade Organization guidelines, and contain engagement with Chinese authorities and companies, he added.

“The outcome of investigation is going to be determined by those … [I] cannot prejudge the outcome of the investigation,” Dombrovskis mentioned.

China’s electrical automotive exports have surged in current months. When contemplating exports of all varieties of automobiles, China’s have already surpassed Germany’s, and are on observe to surpass Japan’s this yr as the most important automotive exporter globally, in line with Moody’s.

Homegrown Chinese electrical automotive corporations Nio, Xpeng and BYD are amongst those who have began to broaden to Europe, however in comparatively small numbers up to now. More than two-thirds of China’s electrical automotive exports to Europe had been from Tesla and different worldwide manufacturers manufacturing in China, in line with HSBC.

However, the longer term penalties for enterprise are nice.

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

The different ingredient of the EU’s subsidy probe is “risk of injury” for the European auto trade, he instructed reporters.

European auto giants akin to Volkswagen derive vital gross sales from China however have struggled to penetrate the extremely aggressive electrical automotive market there. Earlier this yr, VW and EV startup Xpeng introduced a strategic partnership by which they’d collectively develop automobiles for the Chinese 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 Car Association, additionally mentioned in a web-based publish that China’s new power car exports are rising due to a extremely aggressive home provide chain and market atmosphere.

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

China’s electrical car ambitions began effectively over a decade in the past. Former Audi engineer Wan Gang turned China’s Minister of Science and Technology in 2007 and satisfied the central authorities to roll out a nationwide technique for creating new power automobiles and battery know-how.

Between 2009 and 2015, the central authorities spent no less than 33.4 billion yuan ($4.57 billion) in subsidies on creating electrical automobiles, in line with the Ministry of Finance. Beijing has tended to lump EVs into the broader class of recent power automobiles.

The government-led push was not with out waste. In 2016, the Ministry of Finance mentioned it discovered no less than 5 corporations cheated the system of over 1 billion yuan. 

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

— CNBC’s Clement Tan contributed to this report.