European Commission President Ursula von der Leyen has announced an anti-subsidy inquiry

The electric vehicles sector is a “crucial industry for the clean economy, with a huge potential for Europe. But global markets are now flooded with cheaper Chinese electric cars. And their price is kept artificially low by huge state subsidies,” von der Leyen said during her State of the Union speech in Strasbourg.

“This is distorting our market. And as we do not accept this from the inside, we do not accept this from the outside. So I can announce today that the Commission is launching an anti-subsidy investigation into electric vehicles coming from China,” she went on, prompting applause from some members of the European Parliament.

“Europe is open to competition but not to a race to the bottom. We must defend ourselves against unfair practices.”

The unexpected announcement marks a significant escalation in EU-China relations and represents a victory for France, which had pushed for the inquiry to be launched.

During her speech, von der Leyen drew a parallel between what happened in the past to the European solar industry and what could happen in the future to the European car industry, both of which face steep competition from their Chinese counterparts