In a recent statement cited by the Financial Times, the head of Volkswagen‘s (VW) brand, Thomas Schäfer, cautioned Brussels against raising tariffs on imported Chinese electric vehicles (EVs). Schäfer stressed that such a move could prompt “retaliation” against international brands operating in China.

The European Commission (EC) is currently investigating electric car imports from China, with expectations of tariff increases soon. This decision stems from concerns over a surge in imports, which threatens domestic producers transitioning from traditional combustion engine vehicles to electric ones.

Schäfer expressed his opposition to tariffs, advocating for fair competition on equal terms for all players in the market. He highlighted the potential consequences of imposing tariffs, citing the likelihood of retaliatory measures.

This sentiment mirrors similar concerns voiced by Mercedes-Benz CEO Ola Källenius, who urged Brussels to lower tariffs on Chinese EVs in March.

While carmakers like Stellantis and Renault have voiced concerns over the threat posed by Chinese EVs, German automakers heavily reliant on the Chinese market have pushed back against the investigation, fearing repercussions on their sales and profits.

The European Union’s probe has drawn criticism from Beijing, which contends that its companies are more competitive without subsidies. The European head of China’s BYD previously emphasised the company’s self-sufficiency in vehicle manufacturing.

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Currently, Chinese EVs face a 10 per cent tariff when imported into Europe, while European carmakers encounter a 15 per cent tariff exporting to China. This discrepancy partly explains why many German models sold in China are manufactured locally.

In response to these developments, some Chinese carmakers are considering manufacturing locally in Europe. BYD announced plans to construct a new car plant in Hungary for producing EVs.

The call for higher tariffs coincides with international carmakers facing challenges in the Chinese market, where local brands have gained traction with lower-priced, technologically advanced offerings.

Despite its declining market share in EVs in China, Volkswagen remains committed to the market. Schäfer affirmed the company’s dedication to China, acknowledging the competitive landscape but expressing confidence in Volkswagen’s ability to adapt and thrive.

Schäfer’s remarks were made during the FT’s Future of the Car Summit.

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