Stellantis prepares to compete with Chinese rivals in European EV market

Stellantis, the multinational automotive corporation, expects a major confrontation with Chinese rivals in the European market for electric vehicles (EVs), warning of significant consequences for jobs and production, according to Chief Executive Carlos Tavares. These remarks, made in an interview with Reuters, are among Tavares’ most strongly worded yet as tensions between Beijing, Brussels, and Washington over EV trade intensify.

The European Union (EU) is expected to decide next month whether to follow the United States’ lead in imposing additional tariffs on Chinese carmakers. U.S. officials announced plans to impose duties of up to 100 percent on Chinese-made EVs and EV materials by 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 will not allow Western automakers to avoid restructuring to meet the challenge from lower-cost Chinese manufacturers.

The European Commission will unveil an initial decision on potential tariffs on Chinese EV imports on June 5, while China has been threatening counter-tariffs.

“When you fight against the competition to absorb 30 percent 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.

He warned that tariffs would only fuel inflation in the regions where they are imposed, potentially impacting sales and production.

Tavares highlighted the looming overcapacity in the European auto sector, with Chinese automakers already on track to sell 1.5 million vehicles in Europe, equivalent to a 10 percent market share and up to 10 assembly plants worth of production.

Last week, Stellantis announced that it would start selling EVs of its Chinese partner Leapmotor outside China during this year, beginning in Europe in September. This joint venture, the first between a Western and a Chinese carmaker designed to sell and produce EVs from a Chinese manufacturer outside China, will help Stellantis expand its global offerings of budget vehicles.