SCOTT SIMON, HOST:
There's a battle between Europe and China that's brewing over electric vehicles. The European Union has accused China of dumping cheap, government-subsidized electric cars on its market, contending that it's unfair for European automakers. The EU has launched an investigation. NPR's Rob Schmitz joins us now from Berlin. Rob, thanks so much for being with us.
ROB SCHMITZ, BYLINE: Morning, Scott.
SIMON: It seems like every automaker is certainly trying to move to electric vehicles. What's the problem the EU has with Chinese electric vehicles?
SCHMITZ: Yeah. According to European Commission President Ursula von der Leyen, China's government is funneling state money into its electric vehicle companies. And that's made it easier for them to sell cars outside of China for cheaper prices than cars made by automakers in the local markets they're exporting them to. And this was sort of the standout section of von der Leyen's state of the union speech this week. Here's what she said.
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URSULA VON DER LEYEN: This is distorting our market. And as we do not accept this distortion from the inside in our market, we do not accept this from the outside.
SCHMITZ: And, Scott, von der Leyen says that's why the EU is now launching an investigation into this.
SIMON: And what does China say?
SCHMITZ: Well, China was pretty quick to respond. Its Commerce Ministry called this investigation a, quote, "naked protectionist act" that'll distort the global auto industry supply chain. And it warned it'll have a negative impact on China-EU trade relations.
SIMON: Rob, as I don't have to tell you, China has state industries. They pour a lot of money into them.
SCHMITZ: That is correct.
SIMON: This is not a newsflash. Why is the EU raising this complaint now?
SCHMITZ: Yeah, this is - none of this is a surprise. You know, a lot of people are saying this should be a short investigation. One reason this might be coming now is because Ursula von der Leyen's term as president is up next year. And this sounds an awful lot like the beginning of a reelection campaign.
SIMON: Do you see more Chinese electric vehicles on the highway, say, in Germany where you are?
SCHMITZ: No, not here in Germany. And I would notice them because I used to ride in them for years when I reported from China. But they are starting to appear in countries that have built the best infrastructure for electric vehicles in Europe. People are starting to see more Chinese cars in Norway, the Netherlands, Belgium. You know, but it's interesting, these countries don't seem to be complaining too much about the threat of these Chinese electric vehicles.
SIMON: The French certainly are, though, aren't they?
SCHMITZ: (Laughter) Yes, they are. French automakers are angry - very angry - about this. They've been pressuring von der Leyen to launch this investigation because they feel threatened by these Chinese cars entering their market here on their home turf.
SIMON: And what about Germany? It certainly has a vigorous auto industry.
SCHMITZ: It does. And they are not saying a thing.
SIMON: And why not?
SCHMITZ: Well, unlike French carmakers, who almost have zero presence in China, Germany's biggest automakers - we're talking about VW, Mercedes and BMW - they're doing very good business in China, and they do not want to upset that. I spoke to Burkhard Riering, editor-in-chief of Germany's Automobile Weekly, about this. He says, on one hand, German automakers would love less competition here in Europe from China.
BURKHARD RIERING: But on the other hand, they have to fear a retaliation on the Chinese market. And China is by far the largest market in the world, as you know. I guess it's 12 times bigger than the German market, and we are in car country.
SCHMITZ: And, Scott, should this EU investigation result in tariffs on Chinese cars, these German automakers would be an easy target for retaliation from China. And that's not something Germany needs, especially now as its economy - and this is Europe's largest economy - is showing signs of contracting.
SIMON: NPR's Berlin correspondent Rob Schmitz. Thanks so much for being with us.
SCHMITZ: Thanks, Scott. Transcript provided by NPR, Copyright NPR.
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