Credit：Xinhua News Agency
The Chinese government is pressuring domestic automakers to halt searches for production sites in the EU and settling new deals, and generally keep a low profile while Beijing’s negotiations over EV tariffs are ongoing, Bloomberg cited people familiar with the matter.
State-owned Dongfeng Motor Group Co. was reported to have already paused plans to potentially manufacture cars in Italy in response to the warnings. Dongfeng officials said Rome’s support for the EU tariffs was the reason for its pivot, the Chinese government is also concerned about potential overcapacity due to the bumpy EV shift and poor demand for Chinese cars in Europe, according to the report.
Because of the ongoing tariff negotiations, another state-owned company Chongqing Changan Automobile Co. was said to cancel an event to launch its brand in Europe that was originally planned for this week in Milan.
The European Commission announced in July it imposed provisional countervailing duties of up to 37.6%, on top of the ordinary battery electric vehicles (BEV) import duty of 10%, on imports of BEVs from China. The Commission disclosed on October 4 its proposal to impose definitive countervailing duties on imports of BEVs from China has obtained the necessary support from EU Member States for the adoption of tariffs. The announcement cleared hurdles for the EU to introduce up to 45% definitive tariffs following an anti-subsidy investigation. Since a qualified majority of 15 EU members completed, the proposed definitive tariffs are set to go into effect from next month for five years.
In face of the risk of elevated extra tariffs, China's new generation of EV manufacturers are teaming up with local industry to make their cars are considered homegrown.
China's No. 1 EV maker BYD has announced plans for its own factory in Hungary, with another on the horizon in Turkey. Barcelona will play host to the Omoda E5, made by China's Chery Automobile, which has partnered with Spain's Ebro-EV Motors. Leapmotor International, a venture co-founded by Chinese EV maker Leapmotor and Chrysler and FIAT owner Stellantis NV, expects assembling of T03 model will start at a plant in Tychy, Poland, by the end of the year. Zeekr plans to use existing production facilities in Europe owned by its parent Geely, and is considering building its vehicles in Europe to avoid EU duties.
Geely executives recently said in September the Volvo Car parent is scouting locations for a plant in Europe. "It is not 100 percent yet," Li Chuanhai, vice president of Geely Auto Group replied to a question about whether the company would build a plant in the region. "We have a lot of possibilities," Li said when asked about the ongoing talks between Geely and Poland’s government over a joint EV venture in the country, declining to offer more details.
Xpeng Inc is in the initial stages of selecting a site in the European Union as part of its future plan to localize production, CEO He Xiaopeng said in an interview in September. He said his company expects to build capacity in areas with “relatively low labor risks.”
Nio Inc. is preparing a takeover bid for Audi’s car plant in Brussels, which is facing possible closure, Belgian newspapaer De Tijd reported in September. Audi parent Volkswagen Group said in July it was considering closing the Brussels site due to low demand for the Q8 E-Tron, the plant's only model.
But Valdis Dombrovskis, an executive vice president of the European Commission, warned in August that the effort to transfer some auto production to Europe would only work if the firms meet rules-of-origin requirements that dictate a minimum level of value must be created in the EU. “How much of the value added is going to be created in the EU, how much of the know-how is going to be in the EU? Is it just an assembly plant or a car manufacturing plant? It’s quite a substantial difference,” Dombrovskis told the Financial Times.
