According to the Financial Times, the EU plans to require Chinese companies to transfer intellectual property to European companies in exchange for EU subsidies as part of efforts to strengthen clean technology trade rules.
Two senior EU officials revealed that the EU will introduce new standards when disbursing €1 billion in subsidies for battery development this December. These standards will require Chinese battery companies to establish factories in Europe and share technical expertise to qualify for subsidies. This pilot measure may later be expanded to other EU subsidy programs.
This plan reflects the EU's increasingly tough stance on China. Last month, the European Commission announced plans to impose tariffs of up to 35% on Chinese electric vehicles, in addition to the existing 10% tariff. Furthermore, the EU has introduced stricter requirements for companies applying for hydrogen subsidies, stipulating that no more than 25% of the electrolyzer components used to produce hydrogen can originate from China.
Individuals close to U.S. President-elect Donald Trump indicated that Trump intends to pressure the EU to align with U.S. policies by introducing additional barriers to Chinese goods and investments.
"If we want to collaborate with Trump on parts of his agenda, we need to decide how to approach China," said a senior EU diplomat.
Elisabetta Cornago, a senior fellow at the Centre for European Reform, stated that the European Commission is "leaving no stone unturned" in its efforts to strengthen trade defenses against a potential surge of Chinese trade activity in Europe.
The increased scrutiny of Chinese technology imports has already driven some companies to take preemptive action. For example, CATL, the world's largest electric vehicle battery manufacturer, has established mega factories in Europe, investing billions of euros in Hungary and Germany. Similarly, Shanghai-based Envision Energy is investing hundreds of millions of euros in production facilities in Spain and France.
Meanwhile, Europe's own battery manufacturer, Sweden-based Northvolt, is reportedly on the brink of bankruptcy.
Batteries are a critical component of electric vehicles, accounting for over a third of their total cost. The battery supply chain is thus vital to Europe's automotive industry as it transitions to cleaner, less polluting vehicles.
Cornago cautioned, however, that "a tougher EU stance on Chinese components could backfire and undermine its decarbonization goals."