CSIS: ‘Chinese EV makers got more than €200 billion of state aid’

According to the Center for Strategic and International Studies (CSIS), based in Washington, D.C., Chinese car manufacturers received some €216 billion in government aid to produce electric cars.

The American think tank’s researcher Scott Kennedy says more than half of it was given as a turnover tax exemption. Other subsidies include premiums for new electric cars, state-financed charging infrastructure, governmental purchasing of EVs, and subsidies for R&D on electric vehicles.

Western reactions

Western countries have already reacted to what is seen as ‘unfair competition’ in the car market. The US has heightened its import tariffs on Chinese vehicles from 25 to 100%, and recently, the EU has concluded its investigation on disloyal subsidies by the Chinese authorities and decided to raise import tariffs on Chinese EVs from 10 to (maximum) 38%.

Following the lead of the US and the EU, Canada is now also looking to impose higher tariffs on EVs made in and imported from China. Ontario Premier Doug Ford has called for Ottawa to at least match the US tariffs on Chinese EVs.

So far, nothing is inevitable, but Canada’s Finance Minister, Chrystia Freeland’s spokeswoman, said, “Canada is actively considering next steps to counter Chinese oversupply. “Protecting Canadian jobs, manufacturing, and our free trade relationships is essential,” she added.

According to Bloomberg, the value of imported EVs from China has recently skyrocketed in Canada, from 100 million Canadian dollars in 2022 to 2.2 billion in 2023 ( €68 million to €1.5 billion). Due to the plans to raise tariffs in the US and the EU, Canada fears that China could increasingly offer its electric cars where the hurdles are lower, for example, in Canada.

Canadian Prime Minister Justin Trudeau said he is monitoring the situation and had “significant conversations” about Chinese production at the recent G7 summit.

The quadrupling of the US Import tariffs on Chinese cars will usually be effective on 1 August 2024. The additional tariffs in the EU will likely be levied from 4 July onward.

What about governmental aid in the West?

Scott Kennedy from CSIS thinks that the 230 billion dollars of support by the Chinese government is still a cautious estimation because other indirect aids are not taken into account, like local car subsidies to buy EVs, cheap loans for land and energy, etc.

Nevertheless, he also points out that Chinese cars have been considerably improved with the help of the Chinese authorities, making them far more attractive for domestic and foreign consumers.

Meanwhile, the average Chinese government aid has diminished from $13,860 per car in 2018 to less than $4,600 in 2023. That’s far less than what American consumers can obtain as a subsidy for purchasing an electric car: $7,500.

According to research by the American think tank CSIS, Chinese EV manufacturers received 117.6 billion dollars in government aid as turnover tax exemptions, 65.7 billion for consumer premiums, 25 billion for R&D, 18 billion for governmental  orders, and 4.5 billion on infrastructure subsidies /Belga graphic, source: CSIS

No trade war

Although Western car manufacturers are concerned about a ‘level playing field’, they are not keen on starting a real trade war against China. European carmakers, especially the Germans, have large businesses in China and are afraid of China raising import tariffs, too.

The French car companies CEOs Carlos Tavares (Stellantis) and Luca de Meo (Renault) have recently emphasized that entering a trade war benefits nobody. Tavares said he preferred becoming more competitive by cutting costs and accelerating EV development. At the same time, de Meo pointed out that, in the long run, it was far better to collaborate with the Chinese than to fight them.

And, of course, in the whole discussion, one has to consider the governmental aid Western governments provide to the car industry, directly and indirectly. The EU is financially backing the implementation of battery production in Europe to get more independent from China; many Western countries have incentives for introducing electric cars, and several European countries are trying to outbid each other with subsidies for new automotive businesses to come to their country.

Many Chinese EV manufacturers are also considering building one or more EU or US factories to avoid higher taxation. BYD, for example, already has an electric bus plant in Hungary and wants to make cars nearby, while it is looking for a second location in Europe to build a second EV car factory.

Just now, Nio CEO William Li said that he expects his models to remain competitive in Europe despite higher import tariffs: “Even if we are going to be hit with so many tariffs, we still have a chance. We are still competitive, but, of course, it will affect some sales and profits.”

He also added that once Nio’s sales reach approximately 100,000 vehicles in Europe, the company will consider producing vehicles in the European Union or the U.K.


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