Mobility Portal, Spain
Date: July 11, 2024
Inés Platini
By Inés Platini

Volvo confirms EV production in China “will continue”: End of the debate?

This was confirmed by Volvo Cars to Mobility Portal Europe, following the news that the company would transfer all electric vehicle production to Belgium to avoid Chinese tariffs. What are their plans in the EU?
Volvo confirms EV production in China "will continue": End of the debate?
Volvo XC40 Recharge production in Ghent, Belgium.

Recently, it was reported that Volvo Cars would initiate the relocation of electric vehicle (EV) production from China to Belgium in response to the tariffs that the European Union (EU) imposes on cars from China.

In reaction to this scenario, Mobility Portal Europe consults with the company, which states that “this news is not accurate”.

Furthermore, Volvo emphasizes: “We are adding production capacity for the EX30 in Ghent, Belgium; however, production in China will continue.”

The decision to manufacture this model in the European country reflects its ambition to produce its cars as close as possible to the markets where they are sold.

In line with this, in June 2023, they announced that they were exploring additional locations for EX30 production, alongside plans to expand the Ghent plant to manufacture this model from 2025 onwards.

“That plan remains unchanged,” states Volvo Cars’ press office.

According to them, this decision is driven by strong demand for this car, which was introduced early last year and received “almost universal acclaim and several major awards.”

The firm expects this to be one of its best-selling models in the coming years, particularly as it aims to exclusively market fully electric vehicles by 2030.

Volvo EX30.

What is Volvo’s response to the EU-China conflict?

In October last year, the European Commission initiated an investigation to determine if fully electric vehicles manufactured in China received distorting subsidies, potentially justifying additional tariffs.

The study could extend up to 13 months, and provisional anti-subsidy duties may be imposed nine months after its initiation, a step taken in mid-June.

The representative for the EU’s 27 member states has provisionally concluded that the value chain of EVs produced in China benefits from unfair subsidies.

“This is causing a threat of economic harm to EU EV producers,” they stated in their release.

Consequently, the Commission has contacted Chinese authorities to review these findings and explore potential solutions consistent with World Trade Organization (WTO) rules.

“We are currently closely analysing the latest developments in the investigation,” detailed Volvo Cars’ press team to Mobility Portal Europe.

In this context, the regulatory body previously disclosed the level of provisional countervailing duties it would impose on EV imports from China.

The individual rates applied to the three sampled Chinese producers would be 17.4 per cent for BYD, 20 per cent for Geely, and 38.1 per cent for SAIC.

Other EV manufacturers in the Asian country, who cooperated in the investigation but were not sampled, would face a weighted average rate of 21 per cent.

As for all other non-cooperating producers, they would be subject to a residual rate of 38.1 per cent.

These countervailing duties finally came into effect on 5th July, for a maximum duration of four months.

During this period, EU member states must make a final decision on the definitive duties, which, once adopted, would render the duties definitive for a period of five years.

“Once the investigation concludes later this year, following state member votes and the publication of final tariffs in November, we will have a clear and accurate overview of how this will impact Volvo Cars,” affirmed the company.

Volvo also faces tariffs from the US on China

A spokesperson for the firm in the United States (US) recently informed InsideEVs that the launch of the compact electric EX30 in the country will be delayed until 2025, deviating from the original plans to introduce it in 2024.

The company had intended to unveil this affordable EV with an initial price around 35,000 dollars in the US.

According to the report, a key factor in determining this figure was the car’s manufacturing location in China, within facilities owned by the Geely Group, Volvo’s parent company.

However, concerns that affordable Chinese EVs would flood the US market and undercut local manufacturers’ prices were decisive.

This led the Joe Biden administration to impose new tariffs of 100 per cent on EVs from China.

As a result, EX30 models produced in the Asian country would likely have had a significantly higher cost than initially announced, complicating their marketability in the United States.

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