Xpeng Inc (NYSE:XPEV) and Chinese EV rivals NIO Inc (NYSE:NIO) and Li Auto Inc (NASDAQ:LI) were in reverse after the European Union launched an ‘anti-subsidy’ investigation into Chinese electric vehicle makers.
Xpeng stock was down a little more than 3% in early deals, while NIO Inc (NYSE:NIO) was down 2.2% at $10.34 while Li Auto Inc (NASDAQ:LI) fell 2.4% at $39.72.
Ursula von der Leyen, European Commission (EC) president, in her State of the Union speech this morning, said the EV sector is "crucial" for Europe's economy but global markets are "flooded with cheaper Chinese electric cars and their price is kept artificially low by huge state subsidies".
Also alluding to how China's solar industry had ravaged European rivals through "unfair trade practices", she said the subsidy support for Chinese EVs is "distorting the market".
In a recent note, analysts at UBS warned that the European auto market seems to be moving to an oversupply situation amid the rise in production from local OEMs, Tesla's Berlin plant, and Chinese imports, leading to major companies such as Volkswagen Group (XETRA:VOW) (VW) and Renault losing market share and facing significant pressure on their profit margins.
She did not mention that Europe does provide funding for the automotive sector via support for R&D, but stressed that the union "do not accept [huge state subsidies] from the inside, we do not accept this from the outside".
She said the EC is launching an "anti-subsidy investigation into electric vehicles coming from China".
In Europe, shares in Renault jumped 5% on the announcement, with VW and BMW rising 3%, while Stellantis and Porsche also moved higher.