NewsEU's tariff gamble: Can it curb China's electric car surge?

EU's tariff gamble: Can it curb China's electric car surge?

"We cannot imagine that we will stop anything by imposing tariffs," said Jean Philippe Imparato from Stellantis, when asked about tariffs on Chinese cars. The EU countries have agreed to impose them. Brussels accuses China of subsidizing production, which threatens the European industry.

Jean Philippe Imparato will lead Stellantis in Europe.
Jean Philippe Imparato will lead Stellantis in Europe.
Images source: © Getty Images | Thierry Monasse

7:33 AM EDT, October 15, 2024

“In the '80s and '90s, people talked about the Japanese Toyota invasion in Europe. A decade ago, the same was said about cars from South Korea. And what? Did anything stop them? Are tariffs capable of stopping anything? No,” stated Jean Philippe Imparato, responding to money.pl's question.

In recent years, Imparato led Alfa Romeo and is now the right-hand man of CEO Carlos Tavares in the Stellantis automotive group, which includes brands such as Opel, Fiat, Lancia, and Maserati. He was recently appointed COO for the Europe region and several other countries. He is also considered one of the candidates to succeed Tavares as CEO, who is expected to leave at the beginning of 2026.

The European Commission conducted an investigation and found that China is subsidizing the production of electric cars, allowing them to sell vehicles at artificially low prices. This has raised concerns within the EU that the European automotive industry could become the next sector unable to cope with China's perceived unfair competition.

On October 4, European Union countries agreed to impose tariffs on Chinese electric cars. Currently, 40% of China’s electric vehicle exports go to the EU.

Germany, Hungary, Malta, Slovenia, and Slovakia opposed imposing tariffs, while Belgium, the Czech Republic, Greece, Spain, Croatia, Cyprus, Luxembourg, Austria, Portugal, Romania, Sweden, and Finland abstained. Poland and other EU countries were in favor.

The European Automobile Manufacturers' Association (ACEA) reports that in 2019, Chinese brand cars accounted for 0.4% of new electric car sales in the European Union. This figure rose to 1.4% in 2020, 1.7% in 2021, and reached 3.7% by the end of 2022. According to European Commission data, this share will reach 15% in 2025. The Automotive Market Research Institute Samar calculates that today, Chinese cars constitute 1.5% of the Polish market.

"We talk about the Chinese as competition. Let's prepare for the Indians," Imparato added, noting that cars from India are just a matter of time. "We cannot imagine that we will stop anything by imposing tariffs."

In 2023, the Indian automotive giant Tata Group, owner of Jaguar Land Rover, announced plans to build a battery factory for electric cars in the United Kingdom.

EU negotiates with Beijing

According to Reuters sources, on the upcoming Friday, France, Greece, Italy, and Poland are set to vote for tariffs on Chinese electric cars at 45%. This measure is expected to be strong enough to enact despite potential retaliation from Beijing.

On Monday, European Commission President Ursula von der Leyen met in Berlin with German Chancellor Olaf Scholz. Their discussions included tariffs on Chinese cars. The Berlin government opposes their introduction, fearing retaliatory actions against German car manufacturers in the Chinese market.

Since October 4, the European Commission has not officially announced a decision to impose tariffs. According to Reuters, talks with the Chinese are ongoing. During a joint address with Olaf Scholz, Ursula von der Leyen announced that negotiations would continue even if EU tariffs on Chinese electric vehicles take effect. Scholz expressed hope for reaching an agreement by the end of October.

Meanwhile, Carlos Tavares, CEO of Stellantis, warned in an interview with Reuters that imposing tariffs will prompt Chinese car manufacturers to set up factories in Europe, increasing production overcapacity in the region and potentially leading some local manufacturers to close factories.

Stellantis and its joint venture in China

Stellantis withdrew from the Chinese market in 2023, selling its three factories in Chengdu, Xiangyang, and Wuhan. The European group operated in China through a joint venture with Dongfeng Motors, Dongfeng Peugeot Citroën Automobile. CEO Carlos Tavares announced this decision a year earlier.

Recently, Stellantis found a new business partner in China. In Europe, it collaborated with the Chinese company Leapmotor, a manufacturer of electric cars and SUVs. In the joint venture called Leapmotor International, Stellantis holds 51% of the shares, while the Chinese company holds the remaining 49%. The venture debuted a few weeks ago in Milan.

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