EU inspectors to check China’s BYD, Geely, and SAIC .

(Source Reuters) – European Commission officials will investigate Chinese manufacturers in the coming weeks as part of an investigation into whether to impose punitive tariffs to safeguard European electric vehicle makers, according to three people familiar with the matter.

The inspectors will visit BYD (002594.SZ), Geely (0175.HK), and SAIC (600104.SS), according to two sources, with one claiming that the investigators will not visit non-Chinese brands manufactured in China, such as Tesla (TSLA.O), Renault (RENA.PA), and BMW (BMWG.DE).

The investigation, which began in October and is expected to last 13 months, attempts to investigate whether cheaper, Chinese-made EVs receive unfair public subsidies. The investigation, which China has labeled as protectionist, has heightened relations between Beijing and the EU.

The European Commission, China’s Commerce Ministry, BYD, and SAIC did not respond to demands for comment right away. Geely declined to comment, but quoted an October statement in which the business stated that it followed all regulations and supported fair market competition worldwide.

According to one source, the investigators have arrived in China, and another says visits are planned for this month and February.

According to one source, the trips are for verification activities, such as on-site inspections to check the responses automakers provided to surveys. According to European Commission records, the investigation is in the “initiation stage,” with verification inspections scheduled for April 11.

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The sources requested anonymity because the visit’s details were private.

Last week, China launched an anti-dumping investigation into European Union brandy imports, a move that appeared to be aimed at France, which supports the probe. SAIC’s MG and Geely’s Volvo are two popular Chinese vehicles exported to Europe.

Chinese-made vehicles now account for 8% of the European Union’s  market and might account for 15% by 2025, with these often selling for 20% cheaper than EU-made ones.

China’s Great Wall Motor (601633.SS) said in October that it was the first automaker to submit comments to the EU subsidies inquiry.

China-EU relations have been strained by issues such as Beijing’s increased connections with Moscow following Russia’s invasion of Ukraine. The EU is attempting to lessen its reliance on the world’s second-largest economy, particularly in terms of resources and products required for its green transition.

Simultaneously, Chinese manufacturers, from market leader BYD to smaller rivals Xpeng (9868.HK) and Nio (9866.HK), are boosting up efforts to expand overseas as local competition heats up and domestic growth slows. Many companies have prioritized sales to Europe.

According to a Chinese auto organization, China surpassed Japan as the world’s largest auto exporter last year, exporting 5.26 million vehicles for over $102 billion.

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