MERICS Forum: Chinese EV investments in Europe

On October 4, the European Commission’s proposal on tariffs passed the review of EU member states, with ten supporting, twelve abstaining, and five opposing. This approval adds tariffs between 7.8 percent and 35.3 percent on top of the existing ten percent levy on electric vehicles (EVs) made in China. Nevertheless, Brussels and Beijing are still discussing alternative solutions to the EU’s concerns over imports of China’s subsidized EVs. The next step in the EU debate is to decide on the ultimate objective. While some member states oppose any further measures, others consider Chinese EVs a cybersecurity risk. Several countries also view the tariffs as an opportunity to incentivize more Chinese EV companies to localize their production in Europe. Indeed, Chinese foreign direct investment (FDI) in Europe is increasingly concentrated in the EV sector, comprising over two-thirds of Chinese FDI in Europe in 2023. Hungary stands out, receiving 44 percent of all Chinese FDI in Europe in 2023, mainly due to EV investments. However, whether or under what conditions Chinese EV investments can ultimately be beneficial and safe for Europe remains an open question. In this edition of MERICS Forum, Grzegorz Stec, Head of MERICS’ Brussels Office, asked several experts: Are Chinese EV investments in Europe an essential boost or a brewing risk?