Tariffs Against Chinese EVs Is A Major Trap Says Stellantis CEO

Stellantis has warned that tariffs on Chinese-made EVs and EV parts could be "a major trap" and lead to big consequences in both the EU and America.

Stellantis CEO Carlos Tavares expects a significant battle between the Chinese and their rivals in the European market for electric vehicles (EVs), warning of significant consequences for jobs and production.

This is because the EU is expected to decide on whether to follow in the same steps as the America in imposing additional tariffs on Chinese automakers. Recently, we reported that the American government plans to slap Chinese-made EVs and EV materials with duties up to 100% by Aug 1. 

Tavares said tariffs on Chinese vehicles imported to Europe and the America 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. 

Stellantis CEO Carlos Tavares (left) at the recent ceremony formalising the formation of Leapmotor International.

Stellantis' latest venture Leapmotor holds strong promise as the firm plans to market the brand in both its major markets and new emerging ones - Malaysia included.

"We are not talking about a Darwinian period, we are in it," Tavares said at Reuters' annual automotive-focused conference in Munich. He also mentioned that the competition from Asian rivals on price will be "very tough."

"When you fight against the competition to absorb 30% of cost competitiveness edge in favor 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 continued.

The European Commission will unveil an initial decision on potential tariffs on Chinese EV imports on June 5. Tavares said that tariffs would only fuel inflation in the regions where they are imposed, potentially impacting sales and production.

Chinese-made EV and EV parts are set to face stiff tariffs in the EU should the European Commission decide to follow in the same footsteps as the American government who have elected to impose tariffs up to 100% on which.

He added that the price battle with Asian rivals would be "very tough" and that it would not be easy for dealers, suppliers, and OEMs. Italy's nationalist government has been pressuring Stellantis to commit to building 1 million vehicles a year in the country, up from 750,000 last year.

Either way, tariffs as such will pose a huge challenge for Stellantis and all its brands on both sides of the Atlantic, as well as its most recent Leapmotor International venture. KR