The European Union’s tariffs on Chinese-made electric vehicles (EVs) could lead to plant closures in Europe, as Chinese manufacturers are expected to build facilities within the region to avoid duties, Stellantis CEO Carlos Tavares warned on Monday.
Speaking at the Paris Car Show, Tavares said the EU tariffs could exacerbate overcapacity issues in the European manufacturing sector. “Tariffs are a good communication tool, but they have side effects,” Tavares said. “It increases the overcapacity of the manufacturing system of Europe. The way to avoid custom duties is to build in Europe,” he added. “You are accelerating the need to shut down plants.”
Tavares noted that European countries, including Italy, are looking to attract Asian automakers as they increase their presence in the region. Establishing production facilities in Europe would allow these companies to circumvent the tariffs imposed on imported EVs under certain conditions.
As an example, Tavares pointed to Chinese EV manufacturer BYD, which is building its first European assembly plant in Hungary. He suggested that Chinese automakers are unlikely to build plants in countries like Germany, France, or Italy due to higher energy costs and other disadvantages. “Chinese carmakers will not go to Germany or France or Italy to build their cars, because they would have cost disadvantages there, starting from energy costs,” he said.
The Italian government, which has expressed concerns over Stellantis’ declining production in the country, has been engaging in talks with Asian automakers about potential investments, including with China’s Dongfeng and Chery Auto.