Commerce chief in Europe to defend China’s EV sector

Five-seater L6 SUV to go on sale just as concerns over economy and wages curb buyer appetite

Commerce Minister Wang Wentao has embarked on a trip to Europe with an eye on preventing the country’s electric-vehicle (EV) exports from resulting in orchestrated trade actions by Washington and Brussels.

On Sunday, he highlighted the country’s contribution to the world’s green energy transition during round-table discussions with more than 10 Chinese manufacturers of electric vehicles and lithium batteries in Paris.

“China’s electric-vehicle companies are competitive due to the innovation of technology and comprehensiveness of its supply-chain network,” Xinhua quoted Wang as saying at the meeting, while denying that subsidies had played a role in the industry’s rapid development.

“The accusations from the US and EU about China’s overcapacity are groundless.”

His remarks follow an anti-subsidy inquiry that Brussels launched into Chinese EVs last October, as well as a request last month that those vehicles be registered with customs authorities in the European Union, with the bloc looking to apply retroactive tariffs.

“The Chinese government will fully support and defend the rights of the industry, because our electric-vehicle development has made important contributions in the process of the world’s green transitioning,” Wang reportedly told the Chinese firms, without elaborating.

He also told producers to enhance risk management in their overseas business expansion and to deepen cooperation with local partners.

EVs and related concerns regarding overcapacity in their production have become an outsize issue challenging China’s relations with its two major export destinations. Treasury Secretary Janet Yellen is visiting China to apply pressure targeting what the US calls overcapacity in its EVs, solar panels and lithium batteries, and EU officials, including executives of German carmakers, are expected to visit China soon.

Analysts have warned that the politicisation of China’s industrial capacity – Yellen has already raised the issue in almost every meeting with Chinese officials and economists – could continue to haunt bilateral relations in the US presidential election year.

“The US and EU could take some measures to protect their own sectors,” said Wang Yong, a professor with the School of International Studies at Peking University. “But customers demand Chinese products due to their better value, and competition can lead to positive economic effects.”

Wang was among the Peking University faculty that sat with Yellen for exchanges on Sunday.

“It’s more about better utilisation of capacity to satisfy the huge demand of developed and developing countries in the world,” he said.

However, the US presidential election in November and an inability to reach technological breakthroughs had pressured Western politicians into raising the issue, Wang added.

The Ministry of Industry and Information Technology has also issued fresh accusations that some countries were hurting themselves as they took restrictive trade measures targeting Chinese electric vehicles.

“Such actions are detrimental to the development of the global automotive industry and could impede the progress of their own electrification transformation processes,” the ministry’s spokesman was quoted as saying by the state-run China Daily yesterday.

Stephen Olson, a senior fellow at the Pacific Forum and a visiting lecturer at the Yeutter Institute of International Trade and Finance, said the American and EU positions on excess industrial capacity in China were “closely aligned”.

“They share serious concerns about the likelihood of excess Chinese production … with devastating consequences for local producers,” he said, adding Beijing could respond to their moves by targeting the subsidisation programme of Washington’s Chips and Science Act and Inflation Reduction Act of 2022.

“China will also argue that it is producing the green energy products that the world desperately needs to effectuate the transition to a less carbon-intensive future, and will in particular point out how beneficial this is to the developing world,” Olson said.

Li Auto plans to launch a new, more economical model aimed at families amid a price war in the country’s electric-vehicle (EV) market.

The mid-sized, five-seater Li L6 SUV would be priced under 300,000 yuan (HK$331,000), the carmaker said, adding it would unveil final selling prices at a launch event on April 18.

The SUV, which will come with extended-range battery technology, will be the cheapest model developed by the Beijing-based carmaker yet.

The L6 would “bring you happiness”, Li Auto said in a statement on the Weibo microblogging site yesterday.

“All EV makers are aware of weak market sentiment,” said Tian Maowei, a sales manager at Yiyou Auto Service in Shanghai. “The leading players are either offering price cuts or unveiling cheaper models to cater to budget-conscious consumers.”

Li Auto is redoubling efforts to bolster sales in a cutthroat market. The carmaker, one of the country’s top brands last year, has set a lofty delivery target of 800,000 units for 2024, a 127.5 per cent increase year on year.

In the first three months of this year, it delivered 80,400 units, an increase of 52.9 per cent from a year ago.

Last year, Li Auto reported a year-on-year jump of 182 per cent after handing over 376,030 vehicles to mainland customers. The company broke its monthly sales record in nine consecutive months from April to December.

Li Auto, founded in 2015, trails only Tesla in the premium vehicle segment and is seen as the US firm’s nearest rival on the mainland. Tesla delivered more than 600,000 Shanghai-made Model 3s and Model Ys to mainland buyers last year, an increase of 37 per cent from 2022.

The firm’s three larger SUVs, the L7, L8 and L9, have been well received by wealthy mainland families. The L7, currently its cheapest model, starts at 301,800 yuan.

Concerns about a slowing economy and lower wages are deterring mainlanders from buying big-ticket items such as cars.

BYD, the world’s largest EV maker, has led a new round of price reductions since February, with some domestic competitors such as Xpeng and Zeekr following suit.

The company has slashed the prices of nearly all of its cars by 5 to 20 per cent, as competition escalates in the country’s overcrowded market.

Cui Dongshu, general secretary of the China Passenger Car Association, said in February most carmakers were likely to continue offering discounts to retain their market share, a trend that could reshape the domestic market.

Strong sales of smartphone vendor Xiaomi’s first production model SU7, which has attracted more than 40,000 orders since presales started on March 28, are also adding to the tough competition in the domestic market.

The SU7, with a driving range of 700km, has a starting price of 215,900 yuan.