Investigation ramps up EUChina tensions
Probe will set tone for upcoming bilateral talks
China39;s EV market share in Europe has been growing
Analysts warn of China retaliation if EU levies tariffs

SHANGHAIHONG KONG Sept 14 Reuters Hong Konglisted shares of Chinese electric vehicle EV makers fell on Thursday after the European Commission launched an investigation into Chinese EV subsidies, escalating EUChina tensions and prompting analysts to warn of retaliatory action.

European Commission President Ursula von der Leyen announced the investigation on Wednesday, accusing China of flooding global markets with electric cars that had artificially low prices because of huge state subsidies.

Eurasia Group analysts said the probe underscored growing protectionist tendencies in Europe and they believed the EU could eventually levy tariffs if the investigation found harm from Chinese subsidies.

If Brussels ultimately levies duties against subsidized Chinese EVs, Beijing would impose countermeasures to hurt European industries, the analysts said.

Other analysts said the probe could slow capacity expansion by China39;s battery suppliers, although the move should not pose a big downside risk for Chinese EV makers because they could turn to other growing markets like Southeast Asia.

Still, it could hurt perceptions of Chinese EV makers as they expand abroad, Bernstein analysts said in a client note.

The manufacturers have been accelerating export efforts as slowing…