China Files WTO Dispute Against US Over 'Discriminatory' EV Subsidies
China began dispute settlement proceedings against the United States at the World Trade Organization on Tuesday, accusing Washington of “discriminatory” electric vehicle subsidies.
The subsidies, starting this year under the 2022 Inflation Reduction Act, render U.S. car buyers ineligible for tax credits ranging from $3,750 to $7,500 if certain battery components were made by Chinese, Russian, North Korean or Iranian manufacturers.
China’s permanent mission to the WTO said the policies are “under the disguise of responding to climate change,” but are “in fact contingent upon the purchase and use of goods from the United States, or imported from certain particular regions.”
According to a spokesperson for China’s Ministry of Commerce (read as CCP), Beijing has urged Washington to “promptly correct discriminatory industrial policies and maintain the stability of the global industrial and supply chains for new energy vehicles.”
In an online statement, the CCP (Chinese Ministry of Commerce) said the subsidy restrictions excluded Chinese products but also negatively impacted the global supply chain and fair competition in the EV market.
China surpassed Japan earlier this year as the leading vehicle exporter. Customs bureau data shows in 2023, it exported 5.22 million cars, about one-third (1.74 million) of which were electric vehicles.
New U.S. rules, which took effect January 1, make just 13 out of more than 50 electric vehicles being sold in the U.S. eligible for tax credits. In 2023, around two dozen models were eligible. As a result, automakers have been working to source parts that would make their vehicles eligible for tax credits, according to The Associated Press.
China’s complaint follows other recent U.S-China disputes, including over tariffs and a U.S. bill to divest the popular social media app TikTok from its Chinese parent company due to national security concerns.
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China filed a complaint at the World Trade Organization over the U.S.’s Inflation Reduction Act, saying that it was discriminatory and distorted fair competition.
Beijing will use the WTO’s dispute-settlement mechanism to challenge electric-vehicle subsidies, China’s CCP Ministry of Commerce said on its website Tuesday.
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China is taking its dispute with the US over electric-vehicle subsidies to the World Trade Organization, challenging elements of President Joe Biden’s signature climate law passed in 2022.
The Inflation Reduction Act and associated rules are “discriminatory” and have “seriously distorted” the global EV supply chain, the Chinese Ministry of Commerce said in a statement Tuesday announcing a lawsuit filing at the WTO.
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China EV giant BYD posts slowest quarterly profit growth in 2 years
Net profit totalled 8.67 billion yuan ($1.20 billion) last quarter, with revenue up 15.1% at 180.04 billion yuan, according to BYD's stock market filing.
For the whole of 2023, net profit jumped 80.7% to 30.04 billion yuan, BYD said.
Last year, BYD cut the prices of the 13 models that accounted for 93% of its total China sales by an average of 17%, Reuters calculations showed.
However, BYD's combative discounting is seen eating into its domestic profit margins.
"The latest round of price cuts would inevitably result in a margin hit," said John Zeng, head of market forecast for China at London-based consultancy GlobalData.
Yet that could be largely offset by BYD's strong cost control and its growing higher-priced exports, Zeng said, forecasting BYD's exports at 300,000-400,000 units this year.
BYD exported more than 240,000 cars in 2023, about 8% of its global sales.
Sales of autos and related products that made up 80% of BYD's operating revenue recorded a 23.02% gross profit margin in 2023, up 2.63 percentage points from a year earlier.
BYD also unveiled the Yuan Up subcompact electric SUV on Tuesday, the latest addition to its Dynasty series with the starting price of 96,800 yuan.
The new model is developed based on its EV architecture e-Platform 3.0, which builds up a frame structure equipped with blade batteries and enables ranges of up to more than 1,000 km (621.37 miles).
China's EV sales grew 20.8% last year, after a 74.2% rise in 2022, while plug-in hybrid sales growth eased to 82.5% from 160.5%, data from the China Passenger Car Association showed.
($1 = 7.2182 Chinese yuan renminbi)
BYD beats Tesla for a second straight year after producing more than 3 million cars in 2023
BYD launched the BYD Seal in Europe at the IAA auto show in Munich, Germany. The electric sedan has a starting price of 44,900 euros ($48,479).
Arjun Kharpal | CNBC
BEIJING — BYD produced more than 3 million new energy vehicles in 2023, surpassing Tesla’s production for a second straight year.
Tesla said Tuesday it produced 1.84 million cars in 2023. Most of BYD’s cars sell in a lower price range than Tesla’s, and come in hybrid versions in addition to battery-only powered cars.
While total production surpassed Tesla, BYD manufactured 1.6 million battery-only passenger cars and 1.4 million hybrids, putting Tesla on top for battery-only production.
Elon Musk’s automaker only sells purely battery-powered cars. China accounted for about one-fifth of Tesla’s sales in the quarter ended Sept. 30.
BYD shares fell by more than 2% in Hong Kong trading Tuesday morning.
Even though it surpassed the 3 million mark, BYD’s annual sales slightly missed CLSA’s expectations for 3.05 million vehicles.
BYD said it sold 3.02 million new energy vehicles in 2023. The company stopped producing purely gasoline and diesel-powered cars in March 2022.
Competition heats up
Companies wanting a slice of China’s fast-growing electric car market have flooded the space with new models. Chinese smartphone maker Xiaomi last week detailed its plans to launch an EV to compete with Porsche and Tesla.
Li Auto, whose monthly deliveries have surged to record highs, is set to launch its first purely battery-powered vehicle, MEGA, on March 1 and begin deliveries later that month, according to an announcement Sunday. That’s slightly later than initial projections for late February deliveries.
The startup has so far seen success with cars that come with a fuel tank to charge the battery and extend driving range. Li Auto said it delivered more than 50,000 cars in December for a total of 376,030 in 2023, a 182% year on year increase.
Xpeng on Monday launched its X9 MPV, with deliveries starting immediately.
The Chinese EV maker said its overall deliveries of electric cars rose 17% year on year to 141,601 in 2023, with a record 20,115 vehicles delivered in December.
Huawei’s new energy vehicle brand, Aito, said Monday that orders for its M9 SUV have surpassed 30,000 in the seven days since its launch. M9 mass deliveries are set to begin in late February.
Aito said it delivered 94,380 cars in 2023, including 24,468 in December alone. For 2022, Aito said it delivered more than 75,000 cars since beginning deliveries in March of that year.
Zeekr, backed by Geely, said it started Monday to deliver its latest model, the 007 electric sedan. Zeekr said its overall deliveries rose by 65% in 2023 to 118,685.
That total figure is still lower than Nio’s, which said it delivered 160,038 cars in 2023, up by nearly 31% year on year. The company delivered just over 18,000 cars in December.
Among the many other electric car brands in China, Nezha reported deliveries of 127,496 cars in 2023.
Aion, a spinoff of state-owned GAC Motor, said it sold more than 480,000 cars in 2023, up 77% year on year.
Overseas expansion
Several Chinese electric car players including Nio and BYD are also pushing into markets outside China, especially Europe.
BYD’s overseas sales in 2023 exceeded 242,000 new energy passenger vehicles, according to CNBC calculations of public data. The company did not disclose comparable 2022 figures.
The Chinese EV giant announced plans in December to build a new production center in Hungary. The company said it currently sells five models in Europe and plans to launch three more for the region in the next 12 months.
“While the China market is one of the pioneers entering into the era of EVs, we believe moving overseas (building factories in the overseas market rather than just shipping vehicles manufactured in China) is the only way for China’s leading carmakers to achieve success in the global market in the long run,” Nomura China autos analyst Joel Ying and a team said in a Jan. 2 note.
“Given the company already has a bus factory in Hungary, we believe the decision to build the first EU PV factory in Hungary will help BYD to minimize the potential risks in the overseas market,” the report said.
BYD said it sold 36,095 new energy passenger vehicles overseas in December, more than triple the year-ago figure.
— CNBC’s Michael Bloom contributed to this report.
