Stellantis CEO Warns of Tough Battle with Chinese Rivals in European Market

Stellantis expects a major battle with Chinese rivals in the European market for electric vehicles, warning of significant consequences for jobs and production as a result, the group’s Chief Executive Carlos Tavares said on Wednesday.

Growing Tensions in EV Trade:

The comments in an interview with Reuters are among the CEO’s most strongly worded yet as tensions among Beijing, Brussels, and Washington over EV trade grow. The EU is expected to decide next month whether to follow the U.S. in imposing additional tariffs on Chinese carmakers.

U.S. officials said Wednesday they plan to impose duties of up to 100% on Chinese-made EVs and EV materials by Aug. 1.

Impact on Western Automakers:

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

The European Commission will unveil an initial decision on potential tariffs on Chinese EV imports on June 5. China has been threatening counter-tariffs.

Social and Economic Consequences:

“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 said.

Tavares said that tariffs would only fuel inflation in the regions where they are imposed, potentially impacting sales and production.

“We are not talking about a Darwinian period; we are in it,” Tavares said at a Reuters Events Automotive Europe conference in Munich, adding the price battle with Asian rivals would be “very tough.”

Government Pressures and Overcapacity:

Italy’s nationalist government has been pressing Stellantis to commit to building 1 million vehicles a year in the country, up from 750,000 last year. Tavares did not respond specifically to a question about Italy’s demand but outlined the overcapacity looming over the European auto sector.

Tavares said that Chinese automakers are already on track to sell 1.5 million vehicles in Europe, equivalent to a 10% market share and up to 10 assembly plants worth of production.

Engagement with Labor Unions:

Tavares said Stellantis is in “very rewarding discussions” with labor unions at its European operations: “Most of the time, they agree with us in terms of what the risk we are facing is and how we should go through that period.”

Last week, Stellantis announced it would start selling EVs of its Leapmotor Chinese partner outside China this year, starting from Europe in September.

Joint Venture Strategy:

The Stellantis-Leapmotor joint venture, the first between a Western and a Chinese carmaker designed to sell and produce EVs from a Chinese manufacturer outside China, will help the Franco-Italian group expand its global offerings of budget vehicles.