China urges its car manufacturers to halt their expansion in the European Union (EU) amid tariff tensions with Brussels over electric vehicles (EVs).
Beijing is specifically requesting its automakers to pause active searches for production sites within the European region and hold off on signing new agreements with local companies while awaiting the outcome of negotiations with Ursula von der Leyen’s European Commission.
In fact, Dongfeng, which had planned to announce the establishment of a car factory in Italy in early October, according to sources in the sector cited by Europa Press, has decided to halt all operations in response to warnings from its government.
The Chinese directive, as reported by Bloomberg, is not legally binding, but it comes at a time when tensions between Brussels and Beijing over the automotive industry are at an all-time high.
Beyond tariffs, Beijing is reportedly concerned about potential overcapacity due to slowing battery electric car sales in Europe and weak demand for Chinese cars in the market.
Meanwhile, the Italian government under Giorgia Meloni expresses growing concern that European manufacturers like Volkswagen and Stellantis are falling further behind competitors from China and the United States, where local firms have benefited in recent years from a wave of state subsidies that funded the transformation of their industries.
“Europe needs a pragmatic vision; the ideological approach has failed. We have to recognise that,” commented Italian Industry Minister Adolfo Urso.
Beyond Dongfeng, Chongqing Changan Automobile, a state-owned car manufacturer, cancelled its brand launch event in Europe this week.
In this context, Chery has postponed until October 2025 its plans to begin producing EVs at the EbroFactory plant in Barcelona, awaiting developments in the tariff negotiations.
However, BYD is proceeding with its plans to build a factory in Hungary to help circumvent EU tariffs, while also considering another plant in Turkey, with an investment of over 900 million euros.
Meanwhile, the EV market is slowing down. This has impacted Chinese brands, led by Nio and MG, whose electric cars sales in the region have fallen by nearly half over the past month, reaching their lowest level in the last year and a half.
Read more: Global eMobility transition “politically divided”: What are the causes and consequences?
