The chief executive of German luxury car maker BMW warned on Wednesday that the European Union’s investigation into Chinese subsidies for electric cars runs counter to free trade.
The EU launched the investigation last year amid concerns that Chinese subsidies posed a threat to Europe’s own huge car industry.
The move angered Beijing and sparked fears of a trade war between the bloc and the world’s second-largest economy.
Oliver Zipse, chief executive of BMW, which makes major investments in China, the world’s largest auto market, said the Munich-based group was “always striving for free trade.”
“What we are seeing today with the anti-subsidy investigation against China is exactly the opposite of what we expect,” he said in a phone call after the company reported falling first-quarter profits.
BMW’s warnings were unlikely to stop the EU from imposing additional tariffs on Chinese carmakers, he said, but added that he hoped such a move would only be temporary.
“I would warn against making something like this permanent – it would do even more damage to German industry,” he said.
He pointed out that many Chinese imports to Europe are made by non-Chinese manufacturers with branches in the country, including German companies.
“You see how quickly you can shoot yourself in the foot,” he said.
According to the NGO Transport & Environment, almost 20 percent of all electric cars sold in the EU last year were built in China – but more than half of them came from Western automakers.
BMW has a large production site in Shenyang, where the company produces cars through a joint venture.
Zipse’s comments came as BMW Group, which also makes Mini and Rolls-Royce cars, reported first-quarter net profit fell 19 percent year-on-year to 2.95 billion euros (3.17 billion U.S.) due to higher costs -dollar) has fallen.
Sales fell by 0.6 percent to 36.6 billion euros.
In China, the group sold almost 183,000 BMW brand vehicles, 4.1 percent less than in the previous year.
The German car giants in particular have invested heavily in China in the last few decades. They were already struggling due to strong local competition, and the fallout from the EU investigation is causing an additional headache.
If the EU concludes these are unfair practices, it could impose tariffs on Chinese automakers above the EU standard rate of 10 percent, but Brussels could also decide not to take action.
The investigation is one of several state aid probes the bloc has recently launched against China, with the EU accusing Beijing of flooding Europe with subsidized goods.
sr/hmn/lth