The EV games
The EU's going down and it's taking the auto industry with it.
“Whatever it takes”. The phrase rose to fame with former ECB president Mario Draghi and then acquired even more fame when Saudi Arabia’s former oil minister Khalid al Falih used it to signal OPEC’s resolve to keep prices at a certain level through production cuts.
In both cases, there was a clear ring of desperation in that commitment: when Draghi used it, the euro was in very deep doldrums. When al Falih used it, prices were falling and oil producer budgets were in trouble.
This month, European Commission President Ursula von der Leyen joined Desperation Club and, I’d say, she could become an honorary president of that club straight away. Because compared to the EU right now, the ECB and OPEC were having minor problems.
“Europe will do “whatever it takes” to keep its competitive edge,” von der Leyen said in her State of the Union address. She was referring to the looming influx of Chinese EVs into European markets — a danger that European carmakers have already recognised and are fretting about, with good reason.
Chinese EVs are as good as the European ones and they are cheaper. Indeed, this is a dangerous combination, so the EC came to the rescue with an anti-subsidy investigation into Chinese EVs. That’s right. An anti-subsidy investigation. As if subsidies are a bad thing. Which they clearly are for Brussels. But only when someone else is doing them.
Here’s a bit more from von der Leyen (emphasis from the original): “global markets are now flooded with cheaper Chinese electric cars. And their price is kept artificially low by huge state subsidies. This is distorting our market. And as we do not accept this from the inside, we do not accept this from the outside.”
Strong words. Brave words. Righteous words, too. But really, words of such utter desperation it is a bit sad. Because the EU has no chance of competing with China on EVs and winning, not in a free market. Despite things like brand recognition and fandom, and stuff like that.
And because they have no chance in a free market, von der Leyen (who, apparently, is looking for re-election to the top post in the EC, for our sins) is going to make Chinese EVs more expensive to even the playing field. Whatever could go wrong? Or rather, could anything go right?
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