xi's moments
Home | Motoring

Tariffs cannot solve European automakers' woes

China Daily | Updated: 2024-05-27 09:41

Hundreds of vehicles manufactured by Chery line up at a port of Wuhu, Anhui province, on March 10, awaiting export. [WANG YUSHI/FOR CHINA DAILY]

Time is running out for Europe's car giants to restructure their operations and product lines to compete with ascendant Chinese automakers, and stiffer tariffs will do little to protect the status quo, industry executives said during an event.

European trade regulators in Brussels have said they could levy new tariffs on Chinese electric vehicles based on the results of an investigation into Chinese government subsidies.

European Commission President Ursula von der Leyen said on Tuesday that Europe would take a "tailored approach" to its investigation and any potential duties imposed will be "correspondent to the level of damage". It will inform those Chinese EV makers incurring provisional tariffs by June 5.

But industry executives said that Brussels cannot prevent the reckoning that China's lower-cost EVs will force on European automakers and their traditional suppliers.

Chinese carmakers, which command a 30 percent or more cost edge over their European rivals, took 19 percent of Europe's EV market last year, up from 16 percent in 2022, according to Rhodium Group.

"And the window is closing. From my point of view, we have two or three years. If we are not fast ... it will be really tough (for the German auto industry) to survive," Thomas Schmall, a board member at Europe's top carmaker Volkswagen, said at the Reuters Events Automotive conference in Munich.

"Today, it is no longer size that guarantees survival, but speed," he said.

Stellantis CEO Carlos Tavares said carmakers "don't have much time "to adjust their businesses and depended on the removal of "regulatory chaos and the bureaucracies that we have in our backyard".

The surge in Chinese exports, and the prospect of Chinese factories within Europe, are forcing the continent's incumbent automakers to explore partnerships with longtime rivals, turn up pressure on suppliers to cut costs, and intensify discussions with trade unions over the future of plants and jobs, executives said.

Some of these tactics are stumbling out of the gate.

Renault and Volkswagen last week pulled the plug on talks to develop lower-cost EVs over disagreements about where to make the car.

Europe's automakers are dealing with "a form of competitive asymmetry" not only with China but with the United States clean vehicle subsidies, Renault CEO Luca de Meo said on the sidelines of the VivaTech summit in Paris. "In the end, the best thing you can do is to be competitive."

Stellantis is launching a small electric Citroen at 20,000 euros ($21,640), which Tavares said was "at the right price" to compete with Chinese automakers, whose hefty cost advantage is all too clear to their European rivals thanks to partnerships between the companies.

Stellantis' global purchasing chief Maxime Picat said in an interview in Munich that the automaker is pushing its suppliers to match Chinese supplier costs, in part using data gathered from its partnership with China's Leapmotor.

Tariffs can temporarily shrink or eliminate the cost advantage Chinese automakers get from their supply chains.

But Germany's automakers warn that could come at a high price if China goes beyond threats to slap duties on French cognac and retaliates with tariffs on Mercedes-Benz, Volkswagen or BMW vehicles made in Europe. Mercedes generates about 16 percent of its global revenue in China.


Global Edition
Copyright 1995 - . All rights reserved. The content (including but not limited to text, photo, multimedia information, etc) published in this site belongs to China Daily Information Co (CDIC). Without written authorization from CDIC, such content shall not be republished or used in any form. Note: Browsers with 1024*768 or higher resolution are suggested for this site.
License for publishing multimedia online 0108263

Registration Number: 130349