Mobility Portal, Spain
Date: May 23, 2024
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By Mobility Portal

Tavares: “Tariffs on Chinese vehicles imported to Europe and the US are a major trap”

The CEO of Stellantis Carlos Tavares further asserts in his speech that Chinese OEMs are on track to capture a 10% market share in Europe. How will this battle unfold?
Carlos Tavares: "Tariffs on Chinese vehicles imported to Europe and the US are a major trap"

Stellantis anticipates a fierce competition with Chinese rivals in the European electric vehicle (EV) market, forecasting significant consequences for employment and production, according to Chief Executive Carlos Tavares.

In a recent interview, Tavares expressed strong concerns as tensions escalate among Beijing, Brussels, and Washington regarding EV trade.

The European Union is set to decide next month whether to follow the United States in imposing additional tariffs on Chinese carmakers.

Recently, US officials announced plans to implement duties of up to 100 per cent on Chinese-made EVs and materials by August 1.

Tavares warned that such tariffs on Chinese vehicles imported to Europe and the United States represent “a major trap for the countries that go on that path” and will not shield Western automakers from the need to restructure to compete with lower-cost Chinese manufacturers.

The European Commission is scheduled to reveal its preliminary decision on potential tariffs on EV imports on June 5, with China threatening retaliatory taxes.

Tavares highlighted the social consequences of attempting to counter the 30 per cent cost competitiveness edge held by asian manufacturers, stating: “Governments in Europe are not willing to confront that reality right now.”

Tavares also noted that tariffs would exacerbate inflation in the regions where they are imposed, potentially affecting sales and production.

Speaking at the Reuters Events Automotive Europe conference in Munich, he remarked, “We are not talking about a Darwinian period, we are in it,” emphasizing the tough price competition with Asian rivals.

“This is not going to be easy for the dealers. It’s not going to be easy for the suppliers. It’s not going to be easy for the OEMs. As we know in Europe, everybody is talking about change as long as change is for somebody else,” Tavares added.

Italy’s nationalist government has urged Stellantis to increase its vehicle production in the country to one million units per year, up from 750,000 last year.

While Stellantis’ CEO did not directly address Italy’s demand, he underscored the looming overcapacity in the European auto sector.

Chinese automakers are projected to sell 1.5 million vehicles in Europe, capturing a ten per cent market share and equating to the output of up to ten assembly plants, Tavares said.

“If we let the share of the Chinese OEMs grow, then it’s obvious that you are going to create an overcapacity, unless you fight against that competition,” he asserted.

He also mentioned that Stellantis is engaged in “very rewarding discussions” with labour unions at its European operations, noting that the unions generally agree on the risks and strategies needed to navigate this period.

Last week, the company announced plans to start selling EVs from its Chinese partner Leapmotor outside China, beginning in Europe this September.

The joint venture, the first collaboration between a Western and a Chinese carmaker aimed at producing and selling EVs from a asian manufacturer outside China, is expected to help Stellantis expand its global portfolio of budget vehicles.

We will try to be Chinese ourselves, which means instead of being purely defensive vis-à-vis the Chinese offensive, we want to be part of their offensive,” Tavares concluded.

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