Commission Implementing Regulation (EU) 2024/2754 of 29 October 2024 imposing a definitive countervailing duty on imports of new battery electric vehicles designed for the transport of persons originating in the People’s Republic of China

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Regulation (EU) 2016/1037 of the European Parliament and of the Council of 8 June 2016 on protection against subsidised imports from countries not members of the European Union (1) (‘the basic Regulation’), and in particular Article 15 thereof,

After consulting the Member States,

Whereas:

(1) On 4 October 2023, the European Commission (‘the Commission’) initiated on its own initiative an anti-subsidy investigation with regard to imports into the Union of new battery electric vehicles (‘BEVs’) designed for the transport of persons originating in the People’s Republic of China (‘the country concerned’, ‘the PRC’, or ‘China’) pursuant to Article 10(8) of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union (2) (‘the Notice of Initiation’).

(2) The Commission initiated the investigation on the grounds that imports of BEVs originating in the PRC are being subsidised and are thereby causing injury (3) to the Union industry.

(3) After an in-depth analysis of recent market developments and considering the sensitivity of the electric vehicle sector and its strategic importance to the EU economy in terms of innovation, value added and employment, the Commission collected market information from various independent sources. This information tended to show the existence of subsidisation by the PRC which negatively affects the situation of the Union BEV industry.

(4) On the basis of readily available information, there was sufficient evidence demonstrating that imports of the BEVs originating in the PRC benefit from countervailable subsidies provided by the Government of the People’s Republic of China (‘the GOC’). Those subsidies have allowed the subsidised imports to rapidly increase their market share in the Union to the detriment of the Union industry.

(5) The available evidence showed the likelihood of substantially increased subsidised low-priced imports that would pose an imminent threat of injury to an already vulnerable Union industry. Such a surge of low-priced imports, gaining significant market share in a rapidly growing market in which a significant and sustained rate of investments is needed as the Union market transitions to full electrification, would lead the Union industry to incur heavy financial losses which could become rapidly unsustainable.

(6) In these special circumstances, since the Commission was in possession of sufficient evidence tending to show the existence of subsidisation, threat of injury and causal link required for the initiation of an anti-subsidy investigation, it decided, in accordance with Article 10(8) of the basic Regulation, to proceed with such an initiation without having received a written complaint by or on behalf of the Union industry.

(7) Prior to the initiation of the anti-subsidy investigation, the Commission notified the GOC that it had decided to initiate an ex officio proceeding concerning imports of new BEVs from the PRC and invited the GOC for consultations in accordance with Article 10(7) of the basic Regulation. The GOC accepted the offer for consultations, which were held on 2 October 2023. During the consultations, due note was taken of the comments submitted by the GOC. However, no mutually agreed solution could be reached.

(8) As set out in recital (8) of the Commission Implementing Regulation (EU) 2024/1866 (4) (‘the provisional Regulation’), the Commission, on its own initiative, made imports of new BEVs designed for the transport of persons, originating in China, subject to registration as of 7 March 2024 by Commission Implementing Regulation (EU) 2024/785 (5) (‘the registration Regulation’).

(9) In accordance with Article 29a of the basic Regulation, on 12 June 2024, the Commission provided parties with a summary of the proposed provisional duties and details about the calculation of the subsidy rates. Interested parties were invited to comment on the accuracy of the calculations within three working days. Comments were received from the sampled Chinese producers BYD Group, SAIC Group, and Geely Group, and from exporting producers Great Wall Motor Co. Ltd. (‘GWM’), Spotlight Automotive Co. Ltd. (‘Spotlight’), and Volkswagen (Anhui) Automotive Co. Ltd. (‘Volkswagen (Anhui)’).

(10) On 4 July 2024, the Commission imposed provisional countervailing measures on imports of BEVs originating in China by Implementing Regulation (EU) 2024/1866.

(11) Following the disclosure of the essential facts and considerations on the basis of which provisional countervailing measures were imposed (‘provisional disclosure’), the BYD Group, SAIC Group, and Geely Group’s subsidiaries Polestar Performance AB (‘Polestar’) and Volvo Car Cooperation, exporting producers Dongfeng Group, GWM, NIO Holding (‘NIO’), Spotlight, Tesla (Shanghai) Co. Ltd. (‘Tesla (Shanghai)’), Volkswagen (Anhui), the Government of China (‘GOC’), the China Chamber of Commerce for Import & Export of Machinery & Electronic Products (‘CCCME’), the China Association of Automobile Manufacturers (‘CAAM’), Union producers Company 18, Company 22 and Company 24, and the German association Verband der Automobilindustrie e.V. submitted comments.

(12) At the outset, the Commission noted that the CCCME and the GOC commented in detail on the assessments made by the Commission in the provisional Regulation on injury and causality, often without acknowledging the findings and their justification provided by the Commission in the provisional Regulation. The CCCME and the GOC likewise reiterated a large number of comments that were raised in its post-initiation submissions again without addressing the specific explanations and reference to the relevant evidence provided by the Commission in the provisional Regulation. The Commission also noted that the CCCME and the GOC mainly criticised the analysis made by the Commission without bringing new evidence in this regard or supporting the statements made with any evidence. In the sections below, the Commission addressed in detail the comments raised by the CCCME without, however, repeating identical comments raised in various sections.

(13) The parties who so requested were granted an opportunity to be heard. Hearings took place with the BYD Group, the CCCME, the Geely Group, the GOC, Polestar, the SAIC Group, Spotlight, Volkswagen (Anhui), Company 22, Company 24, and Company 27.

(14) The Commission continued to seek and verify all the information it deemed necessary for its definitive findings. When reaching its definitive findings, the Commission considered the comments submitted by interested parties and revised its provisional conclusions when appropriate. In order to have at its disposal more comprehensive data on the Union’s sales prices, cost of production, and profitability in the post-investigation period, the sampled Union producers were requested to provide additional data. All sampled Union producers submitted the requested information.

(15) On 20 August 2024 the Commission informed all interested parties of the essential facts and considerations on the basis of which it intended to impose a definitive countervailing duty on imports of BEVs originating in the PRC (‘definitive disclosure’). All parties were granted a period within which they could make comments on the definitive disclosure.

(16) Parties who so requested were also granted an opportunity to be heard following the definitive disclosure. Hearing took place with the SAIC Group, Company 27, the BYD Group, the CCCME, the GOC, Tesla (Shanghai), the Geely Group, Company 22 and Polestar.

(17) Comments following definitive disclosure were received from the BYD Group, CATL, the GOC, Tesla (Shanghai), GWM, the CCCME, the CAAM, the SAIC Group, the Geely Group, VDA, Eurofer, Company 27, Company 18, Company 24, Company 22, and Polestar.

(18) On the basis of these comments, the Commission revised some of its provisional findings, modified some of the considerations on the basis of which it intended to impose a definitive countervailing duty and informed all interested parties thereof (‘additional definitive disclosure’) on 9 September 2024.

(19) Comments on the additional definitive disclosure were received from the GOC, the CCCME, BYD, Tesla, Smart and Company 18 (only in confidential version). In addition, Company 18 also submitted comments, in confidential version, after the deadline for comments on the additional disclosure. Most of these comments were already addressed in the specific confidential disclosure addressed to the company.

(20) Following provisional disclosure, the CCCME and the GOC claimed, on one hand, that the sample of Union producers was unknown and unrepresentative and, on the other hand, that the interested parties could not assess the representativity of the sample. The CCCME and the GOC further claimed that it was not known if Union OEM producers were included in the sample, whether all the companies in the sample are the Union OEMs/companies transitioning from the production of ICEs to BEVs or there were other BEV producers in the sample, as the Union producers transitioning from ICEs to BEVs may be in a worse economic position than other Union producers. The CCCME and the GOC also claimed that the sample of Union producers was unrepresentative as the Commission did not apply the single economic entity principle to the Union producers that were sampled, even though it was applied with regard to the sampled exporting producers. The CCCME and the GOC further claimed that the single economic entity principle was applied to the Union industry in previous trade defence investigation such as Silicon metal from China (6) where two production entities (FerroPem and FerroAtlantica) of the Union producer group, Ferroglobe group, were considered related parties and the Union producer’s production by both the production entities were considered together. The CCCME and the GOC also claimed that the single economic entity principle was relevant for the establishment of the Union industry sales prices which are compared with the export price for the undercutting and price suppression analysis.

(21) As it was explained in recital (12) of the provisional Regulation, anonymity was granted to the Union producers due to a risk of significantly adverse effect in the form of retaliatory actions. Therefore, the Commission cannot disclose the identity of the sampled Union producers. However, the anonymity granted to the sampled Union producers does not make the sample unrepresentative. As explained in recital (26) of the provisional Regulation, the selection of the sample was based on the largest representative volume of sales and production in the Union of the like product during the investigation period (7). The Commission also considered the geographical spread of Union producers within the Union as well as ensured the inclusion of a wide range of BEVs models. The sampled Union producers accounted for 38 % of sales and 34 % of total production volume of the Union industry in the investigation period. Furthermore, after the verification visit of the sampled Union producers, on 4 June 2024 the Commission added a Note to the file (8) and confirmed that the sampled Union producers amounted to 32 % of sales in the Union and 30 % of production in the Union in the investigation period. Furthermore, disclosing whether all sampled companies were OEMs that produced ICE vehicles and are producing BEVs, likewise, would inadvertently disclose the identity of certain Union producers and thus the Commission would breach its legal obligation to keep the anonymity granted to the Union producers. Therefore, the request to disclose this information was rejected.

(22) Finally, the CCCME confused the single economic entity principle with sampling at the level of the group. For the sake of clarity, the single economic entity principle is applied in certain conditions for the calculation of the export price at ex-works level (i.e. at the factory gate of the producer) for dumping margin calculations. In the present anti-subsidy investigation, the Commission did not need to calculate an ex-works export price and therefore this principle is not applied in the current investigation. As concerns sampling of the Union producers, the Commission informed interested parties at the initiation of the investigation that it will be made at the production entity level and not at group level (9). This is the Commission’s common practice for the sampling of Union producers and there was no information available that could suggest that a different approach was warranted in this investigation. The CCCME and the GOC did also not provide any evidence in this regard. Furthermore, in the Silicon metal from China investigation, contrary to CCCME and the GOC’s claim, the Commission did not apply the single economic entity principle but investigated two producers from the same group. Finally, in the current investigation the calculation of undercutting margin was made at the level of the price to the dealer in the Union as explained in recital (1023) of the provisional Regulation, which is different than the ex-works level.

(23) Therefore, the conclusions in recitals (24) to (45) of the provisional Regulation were confirmed.

(24) In the absence of any comments with respect to the sampling of importers, the conclusions set out in recitals (46) to (47) of the provisional Regulation were confirmed.

(25) Following provisional disclosure, the BYD Group submitted that the selection of the sample distorted the resulting findings, as Tesla (Shanghai) was not sampled despite its large volume of exports of BEVs to the Union market, and that in almost every trade remedy investigation, the Commission selected the sample based on the volume of exports. The BYD Group also claimed that the Commission did not provide a clear explanation for not sampling Tesla (Shanghai) and on what ground the Commission accepted Tesla (Shanghai)’s request for individual examination.

(26) Following definitive disclosure, the GOC and CCCME reiterated their claim that the sample of Chinese exporting producers selected was result-oriented, biased and inconsistent with Article 27(1) of the basic Regulation. Notably, the non-inclusion of Tesla (Shanghai) in the Chinese exporting producers’ sample ran counter to the very purpose of sampling, the basic Regulation, and reflected the Commission’s discriminatory approach. According to the GOC and CCCME, the non-inclusion of Tesla (Shanghai) made the sample unrepresentative, and Tesla (Shanghai) could be reasonably investigated within the time frame. Moreover, the Commission had the time and resources to verify this company and establish its subsidy rate and therefore it could have been included in the sample at the outset. By not including Tesla (Shanghai) in the sample, the Commission artificially increased the weighted average duty applicable to the cooperating non-sampled Chinese exporting producers, showing a targeted and selective approach.

(27) The Commission highlighted that similar allegations were already addressed in recitals (54) and (55) of the provisional Regulation. The selection of the sample fully complied with the provisions of Article 27 of the basic Regulation, taking into account the specificities of the case and was therefore considered to be representative for the Chinese exporting BEV sector. The Commission did not have a targeted and selective approach in establishing the sample. The reasons why the Commission accepted the individual examination request are explained in recital (30) of this Regulation. That the Commission could provide an individual subsidy rate to Tesla (Shanghai) does not mean that, at the time of the selection of the sample, the inclusion of this exporter was possible or appropriate.

(28) Therefore, the conclusions in recitals (48) to (76) of the provisional Regulation were confirmed.

(29) Tesla (Shanghai), an exporting producer in the PRC, requested and was granted an individual examination under Article 27(3) of the basic Regulation.

(30) The Commission accepted the individual examination request of Tesla (Shanghai) given the simple corporate structure of the company, which allowed the Commission to have sufficient time and resources to examine the company. No other individual examination requests were received.

(31) Following provisional disclosure, the BYD Group, the CAAM, the CCCME, the Geely Group, the GOC, the SAIC Group, and NIO commented on procedural issues.

(32) Following definitive disclosure, the CCCME and the GOC commented on procedural issues.

(33) Following provisional disclosure, the CAAM submitted that the Commission required companies to supply information, details and ‘business secrets’ beyond the scope of the investigation.

(34) The Commission disagreed with the claim. The Commission considered the requested information from the sampled exporting producers and their related parties necessary to assess the existence of countervailable subsidies regarding BEVs and their parts and components. Moreover, as already stated in recital (284) of the provisional Regulation, it is for the Commission to determine what information is deemed necessary for the investigation, and not for a party to make that determination. The Commission also recalls that, pursuant to Article 29(6) of the basic Regulation, the information received within the framework of this investigation was used only for the purpose of assessing the existence of countervailable subsidisation in accordance with the basic Regulation and the SCM Agreement. Therefore, the claim was rejected.

(35) Following provisional disclosure, the BYD Group submitted that the ex officio initiation of the investigation was unwarranted. The BYD Group claimed that the wording of ‘special circumstances’ contained in Article 10(8) of the basic Regulation must inform something more than what paragraph 2 of Article 10 of the basic Regulation provides for, and that the explanations given in the Notice of Initiation describe a situation no different from an initiation of the investigation based on a written complaint.

(36) The BYD Group added that the evidence on which the Commission initiated the investigation was a collection of alleged subsidies based on media reports, publicly available audited financial reports of certain holding companies of companies not only producing BEVs and a list of policies and references from previous investigations on imports of products involving different sectors of industry from China, and that a listing of a series of policies and subsidies from previous cases could not be considered compliant with the provisions of Article 11(2) of the SCM Agreement and to meet the standard of sufficiency of evidence regarding the BEV sector.

(37) Moreover, the BYD Group submitted that the allegations on threat of material injury and in particular transition of production structures of the Union automobile industry could not justify an ex officio initiation of the investigation, since the overall economic performance of the Union industry showed quite strong forward momentum.