Subsidies for battery production EU will demand technology transfer from Chinese companies

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The EU Commission is set to revise subsidy rules for sustainable technologies. According to the Financial Times, Chinese companies seeking grants for battery production will be required to share intellectual property with European firms and establish manufacturing facilities within Europe. 

International companies wishing to enter the Chinese market are typically required to form joint ventures with local firms and share their intellectual property. Critics in Europe argue that this policy has resulted in a substantial one-sided transfer of technical expertise to China.

Now the EU Commission is apparently planning a similar measure for the European market: As the Financial Times reports, a tightening of trade regulations for sustainable, clean technologies is currently in progress.

No knowledge transfer, no subsidies

Accordingly, new criteria are to apply in the future, specifically targeting Chinese companies: They will henceforth be required to operate manufacturing facilities and not just final production in Europe if they wish to receive EU subsidies in this market. Associated with this is the expectation that they share technological expertise with local partners. According to the Financial Times, these criteria would come into force by the end of December when the EU announces upcoming subsidies of 1 billion euros for battery production.

Referring to two EU officials familiar with the matter, it is said that this measure is a kind of pilot project. It is conceivable to extend this new regulation to other EU subsidy programs later.

The EU's stance towards China is also becoming stricter

The European Union has already taken a tougher stance on trade regulations with China. As early as October 2024, the European Commission confirmed that it would henceforth impose tariffs of up to 35 percent on electric vehicles produced in China. Such a measure had already been under discussion since end of 2023. These tariffs are to be calculated in addition to the 10 percent surcharge that had previously applied to Chinese electric vehicles.

Similarly, stricter requirements have since applied to companies that want to receive EU subsidies for clean hydrogen technologies: only a maximum of 25 percent of the parts used for electrolysis may henceforth originate from Chinese production if grants are to be provided in the future.

These regulations are not only a response to the currently weakening European economy, especially in the field of sustainable electronics; in September, Northvoltannounced it would cut up to 1600 jobs and scale back its existing expansion plans. The measures are likely aimed primarily at strengthening European battery manufacturers.

However, in general, the handling of Chinese companies in the global market is currently becoming stricter. The designated US President Donald Trump has announced plans to impose new tariffs of up to 60 percent on Chinese export good. As recently as May of this year, the government had tightened the existing regulations regarding electromobility, photovoltaics, and semiconductors from Chinese production.

The increased hurdles for the US market are likely to push Chinese companies to penetrate the European market even more. This is why stricter measures are immediately necessary: "If we want to play along with Trump on some of his goals, then we need to decide what we want to do with China," the Financial Times quotes a senior EU diplomat as saying. (sg)