China’s electric vehicle tariffs are a trap

MUNICH (Reuters) – Stellantis expects a major battle with Chinese rivals in the European electric vehicle market and expects significant consequences as a result, group chief executive Carlos Tavares said on Wednesday.

Tavares said tariffs on Chinese vehicles imported into Europe and the United States are “a big trap for countries that go down this path” and will not allow Western automakers to avoid restructuring to meet the challenge from lower-cost Chinese manufacturers. .

Tavares said tariffs would only fuel inflation in the regions where they are imposed, potentially impacting sales and production.

“We are not talking about a Darwinian period, we are in it,” Tavares said at the Reuters Events Automotive Europe conference, adding that the price battle with Asian rivals would be “very tough”.

The European Commission will release an initial decision on potential tariffs on Chinese EV imports on June 5. The United States has said it will impose 100% tariffs to stop the shipment of Chinese EVs. China has been threatening counter-tariffs.

“When you fight against competition to absorb 30% of the competitive cost advantage in favor of the Chinese, there are social consequences. But governments, governments in Europe, don’t want to face that reality right now.”

Chinese car manufacturers are already on track to sell 1.5 million vehicles in Europe, equivalent to a 10% market share and producing up to 10 factories, Tavares said.

“If we let the share of Chinese OEMs grow…then it’s obvious that you’re going to create excess capacity unless you fight that competition,” Tavares said.

Tavares said Stellantis is in “very rewarding discussions” with unions across its European operations: “For the most part they agree with us in terms of what the risk is that we face and how we should get through this period.”

(Reporting by Joseph White and Christoph Steitz, editing by Rachel More, Madeline Chambers and Elaine Hardcastle)