Stellantis, the multinational automotive corporation, anticipates a fierce battle with Chinese rivals in the European electric vehicle (EV) market, as warned by the group’s Chief Executive Carlos Tavares on Wednesday. Tavares cautioned that this competition could have significant consequences for jobs and production within the company.
These comments from the CEO represent some of his most strongly worded remarks yet, as tensions between Beijing, Brussels, and Washington over EV trade continue to escalate. The European Union (EU) is expected to decide next month whether to follow the United States’ lead in imposing additional tariffs on Chinese carmakers.
On Wednesday, U.S. officials announced plans to impose duties of up to 100% on Chinese-made EVs and EV materials, effective August 1.
Tavares stated that tariffs on Chinese vehicles imported to Europe and the United States are “a major trap for the countries that go on that path,” and they will not allow Western automakers to avoid restructuring to meet the challenge from lower-cost Chinese manufacturers.
The European Commission is expected to announce a preliminary decision on possible tariffs for Chinese electric vehicle imports on June 5. In response, China has threatened to implement retaliatory tariffs.
“When you fight against the competition to absorb 30% of cost competitiveness edge in favour of the Chinese, there are social consequences. But the governments, the governments of Europe, they don’t want to face that reality right now,” Tavares said.
Tavares said that 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 a Reuters Events Automotive Europe conference in Munich, adding the price battle with Asian rivals would be “very tough”.
“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.”
Italy’s government has been urging Stellantis to increase its annual vehicle production in the country to 1 million units, up from 750,000 last year. Although Tavares did not directly address the question regarding Italy’s demand, he highlighted the issue of overcapacity in the European auto industry.
According to Tavares, Chinese automakers are already set to sell 1.5 million vehicles in Europe, capturing a 10% market share and representing the output of up to 10 assembly plants.