BMW's Zipse says China's EV threat to Europe is 'overblown'

BMW CEO Oliver Zipse has spoken out against raising tariffs on Chinese electric cars imported into Europe, calling the threat to the European automotive industry "overblown."

Zipse is the latest automaker executive to warn against erecting bigger trade barriers and follows similar statements from his rivals at Mercedes-Benz and Volkswagen Group.

"The European automotive industry, when it comes to the BMW Group, is not massively damaged by the import of Chinese automobiles, nor is it in the interest of the EU to further impose customs on these products," Zipse told journalists at the company’s annual press conference on Thursday.

Zipse described as "overblown" the fear that China could seriously disrupt European car sales. "Nobody can just come into a market as large as Europe and just take it over," he said.

The likelihood of the European Union increasing the 10 percent tariff on Chinese EVs rose significantly after the European Commission said in early March it had found evidence that China has been handing EV makers in the country unfair subsidies following an investigation.

Chinese automakers, including BYD and SAIC's MG, are targeting Europe with a range of competitively priced EVs, putting particular pressure on mass-market automakers in the region.

German automakers in particular are worried that any tariff increase by the EU would result in retaliation by China, either in the form of reprisal tariff increases or in more negative reactions to their products from customers.

BMW last year made 32 percent of its vehicle sales in China, amounting to 824,832 units. China is BMW's largest market.

Mercedes CEO Ola Kallenius went even further recently to say that tariffs should be lowered on Chinese EVs. "Do not raise tariffs. I am a contrarian, I think go the other way around: take the tariffs that we have and reduce them," he told the Financial Times in March.

VW Group CEO Oliver Blume meanwhile has said he is concerned about the move to protectionism both in Europe and the U.S.

“We are fighting for free and fair trade worldwide and talking also to our government,” Blume told investors at the company’s recent results call in March.

The threat of Chinese imports of low-cost EVs will have a greater effect on volume brands however. Renault CEO Luca de Meo recently wrote of an “onslaught” of Chinese electric vehicles to Europe in an open letter to the EU.

De Meo said that a compact made in China has a cost advantage of between €6,000 and €7,000 -- around 25 percent of the total price - compared with an equivalent European model.

De Meo also quoted a report by Polytechnique university detailing the huge subsidies China has paid to domestic automakers, as well as pointing out the lower energy and wage costs borne by Chinese automakers compared to those in Europe.

However, he said that Europe would need to “manage” relations with China. “Completely closing the door to them would be the worst possible response,” he said.