EU Investigation Into Chinese EV Subsidies May Backfire, BMW CFO Warns: Report

Luxury vehicle maker BMW (Bayerische Motoren Werke ADR) BMWYY CFO has expressed concern over the European Union's probe into subsidies for EVs manufactured in China and exported to Europe, stressing that such scrutiny may instigate more issues than it solves.

BMW CFO Walter Mertl indicated that he wasn't in favor of imposing punitive tariffs and believed that while the investigation may protect companies with minimal sales in China, it could adversely affect every automaker operating within the nation, reported Reuters.

Mertl emphasized the risks of triggering retaliatory actions from Beijing, stating, "The backlash, like a boomerang, can be bigger than what one imagined," underscoring the intricate balance of trade relationships between Europe and China.

China plays a crucial role as the primary market for Germany's top three auto manufacturers. BMW, which exports its iX3 model from China to Europe and plans to export the Mini next year, finds itself susceptible to potential EU tariffs on Chinese imports.

This could further jeopardize BMW's sales in China due to possible retaliatory measures.

Even though a significant 90% of BMW cars sold in China are locally manufactured, certain materials are transported from Europe for production, Mertl pointed out.

China has criticized the EU's investigation initiative as being inconsistent with World Trade Organization guidelines and potentially hindering global EV sales.

Anticipating BMW's third-quarter outcomes, Mertl conveyed optimism, suggesting the firm would unveil favorable results consistent with its updated forecast, which estimates a margin of 9-10.5% on earnings before interest and taxes.

In response to questions regarding potential decreased EV demand, as reported by Volkswagen AG VWAGY, Mertl confirmed a surge in EV sales, with the company aiming to achieve a 15% total electric sales target for the year.

However, he also acknowledged ongoing supply chain hiccups that might persist for the upcoming half-year.

Price Action: BMWYY shares closed lower by 0.89% at $33.37 on Thursday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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