EU should impose higher tariffs on Chinese automakers, Carlos Tavares says

PARIS -- Chinese automakers should be subject to the same tariffs when exporting their cars to Europe as European brands face when sending their cars to China, Stellantis CEO Carlos Tavares, said.

“Very simply, we should ask the European Union to enforce the same conditions in Europe for Chinese manufacturers under which we, the western manufacturers, compete in China,” Tavares told journalists at the sidelines of the Paris auto show this week.

Tavares said Chinese brands must pay tariffs of 10 percent to import cars into the European Union, while European automakers pay tariffs of between 15 percent and 25 percent to import Europe-built cars into China.

Chinese brands such as BYD, SAIC’s MG, Great Wall and Polestar are establishing a foothold in Europe with their cost-competitive electric vehicles built in China.

Chinese brands account for 5 percent of Europe's electric vehicle market, according to a report published on Monday by environmental lobby group Transport & Environment.

Tavares said Chinese automakers could establish themselves In Europe by selling their cars at a loss during the initial stages of their push into the region.

“The European market is wide open to the Chinese and we do not know if their strategy is to grab market share at a loss and increase their price later,” he said.

Tavares said he had raised the issue with French President Emmanuel Macron when the president met with executives from French car companies on Sunday.

“President Macron understands this but it has to be a larger front [from the European Union] to say we welcome the Chinese in Europe but only if they compete with us under the same rules,” Tavares said.

President Macron on Sunday called for a reform of electric vehicle subsidies to better protect European automakers from outside competition, the newspaper Les Echos reported

Macron was reacting not just to the imbalance in tariffs between Europe and China but also the recent U.S. plans to introduce tax credits for automakers who produce EV components, such as batteries, in the U.S.

“The Americans are buying American and pursuing a very aggressive strategy of state aid. The Chinese are closing their market. We cannot be the only area, the most virtuous in terms of climate, which considers that there is no European preference,” Macron told the paper.

Any plan to raise tariffs on Chinese imports might not find favor with Germany, whose automakers are much more embedded in China and still hold significant market share.

A tariff raise could be seen as a provocative move in China, where customers have shown to react quickly to perceived attacks by boycotting foreign brands.

T&E said in its report that Chinese brands were increasingdown their share in Europe because European automakers were slowing down electric car production.

“European carmakers have slammed the brakes on their electric car offerings at a time when Chinese and American carmakers are rapidly bringing new models to the market,” Julia Poliscanova, senior director at Transport & Environment, said.

T&E also said that the EU needs to stimulate local EV production.

“If Europe wants to maintain the competitiveness of its car industry, the EU must introduce a strong industrial policy of its own to match the Chinese and Americans’ muscular support for EVs. The continent’s climate and jobs are at stake,” Poliscanova said.