Stay informed with free updates
Simply log in to Automobiles myFT Digest – delivered straight to your inbox.
Stellantis will move production of some of the Chinese brand’s electric vehicles to Europe, the latest sign of global carmakers changing their regional strategy following Brussels’ announcement of planned additional tariffs on Chinese-made electric vehicles this week.
The owner of the Citroën and Fiat brands announced in May that it will sell electric vehicles from Chinese automaker Leapmotor in its European dealerships from September. However, CEO Carlos Tavares confirmed on Thursday that some of the cars will be built at Stellantis plants in Europe.
“A certain number [Leapmotor] the products will have to be assembled in Europe,” Tavares said at the Stellantis annual meeting in Detroit. He added that the planned tariffs from Brussels “correct the lack of competitiveness” of European carmakers compared to Chinese rivals.
Tavares said the tariffs announced by the European Commission are at levels above which the company previously agreed it would make more sense to import rather than produce locally.
Even before Brussels announced to apply additional tariffs of up to 38 percent on electric vehicles made in China, some Chinese auto groups were planning to move to Europe.
China’s biggest electric car maker BYD, which received a 17.4 percent lower tariff, plans to start making cars at a new plant in Hungary next year and is studying sites for a second plant in Europe. Another Chinese electric car maker, Chery, aims to produce 150,000 cars a year from 2029 from its Barcelona plant.
Daniel Schwarz, an automotive analyst at Stifel, predicted that Chinese OEMs will accelerate the construction of production capacity in Europe over the next three years.
“IN [the] short [tariffs are] positive for European car manufacturers, but negative in the long term as they will lead to more long-term investment by Chinese companies in Europe, more capacity and price pressures similar to what we see now in China,” he said. .
The tariff proposals also highlighted a split in the European auto industry between German automakers that rely on the Chinese market and French and Italian groups that have not penetrated China and rely more on the European market.
Automakers such as Stellantis and Renault have long warned that a wave of cheaper Chinese models will overtake European rivals, while Germany’s Mercedes and BMW have lobbied loudly against increased protectionism, fearing retaliation from China.
“German industry is very exposed to Chinese business. And you know very well that this is why Germany is against these tariffs,” Tavares said.
German automakers have generally reacted negatively to the tariffs, offering support for “free trade” and warning of retaliation in China – their most important market.
“Fair and above all free global trade is very important, it is a driver of innovation and growth,” said Mercedes CEO Ola Källenius, for whom China is the largest market with around 36 percent of global sales.
“The European Commission is thus harming European companies and European interests,” BMW CEO Oliver Zipse said. “Protectionism Risks Triggering a Spiral: Tariffs Lead to New Tariffs, Isolation Rather than Cooperation.”
The Bavarian automaker sees China as its biggest market at 32 percent of total sales – and is also directly affected by the tariff increase – up to 21 percent – as it builds its iX3 electric vehicle in Shenyang and exports it to Europe.
“Tariffs will buy time but not solve the problem,” said another European carmaker executive. “European carmakers need time to come up with low-cost alternatives,” they added – comparing it to the disruption of Europe’s airline industry by low-cost carriers such as Ryanair.