BMW's Chinese EV exports are target of EU subsidy investigation

BMW's Chinese EV exports are target of EU subsidy investigation

Automotive News Europe — 2023-10-06

Automotive Industry

BMW warned that Western automakers face a potentially big backlash from Beijing as a result of the European Union's investigation into subsidies for China-made electric vehicles exported to Europe.

The probe, which could lead to the EU imposting high tariffs on Chinese vehicle imports, could do more harm than good, BMW's CFO Walter Mertl said.

Mertl said the EU investigation would impact every automaker doing business in China while protecting companies that do not have significant Chinese sales.

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

BMW has received a request for information from the EU about its iX3 electric SUV, which it exports to Europe from China. The company is currently filling out the questionnaires for the probe, Mertl told reporters on Friday.

The questionnaires have to be answered within a week, providing details such as investments and manufacturing capacities for EVs exported from China, according to a BMW spokesperson.

BMW builds the iX3 exclusively for global markets in Shenyang, China, and will export Minis built by its joint venture with Great Wall Motor 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.

BMW exported between 15,000 and 20,000 iX3s from China last year.

While 90% 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.

China is the biggest market for Germany's three top automakers -- BMW, Mercedes-Benz and Volkswagen Group.

The EU's request  to BMW adds to evidence that the EU is gathering data not only from Chinese EV-makers such as Nio, BYD and SAIC Motor, but also from western carmakers that manufacture there, as it assesses the degree of state support for the EV industry.

Tesla's exports from China are also a target of the anti-subsidy probe. Through the first seven months, Tesla sold an estimated 93,700 made-in-China vehicles across Western Europe, accounting for roughly 47% of its total deliveries, according to Schmidt Automotive Research.

The next biggest exporter of EVs from China to Europe was SAIC's MG, with roughly 57,500 registrations. Renault, which makes the electric Dacia Spring in China for export, has not said whether it has been contacted about the probe.

EV sales on track

Globally, demand for BMW vehicles is holding up, Mertl said on Friday, speaking ahead of the company's third-quarter results early next month.

Total sales rose more than 5% during the first nine months compared to last year, he said.

Asked whether BMW was seeing dampened demand for EVs reported by VW Group in recent weeks, Mertl said the company was on track to hit its goal of 15% full-electric sales for the year.

BMW's worldwide EV sales gained by a "high double-digit percentage" rate in the last three months.

Mertl said BMW would be able to present "good numbers" in line with its raised forecast for a 9% to 10.5% margin on earnings before interest and taxes.

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