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Stellantis CEO warns of major battle with Chinese EV rivals in Europe

Tavares pointed out the competition's challenges for European dealers, suppliers, and OEMs

Stellantis CEO Carlos Tavares has issued a stark warning about the looming competition with Chinese electric vehicle (EV) manufacturers in the European market, highlighting significant potential consequences for jobs and production. Tavares’ comments come amid escalating tensions between Beijing, Brussels, and Washington over EV trade as the EU considers imposing additional tariffs on Chinese carmakers next month.

In an interview with Reuters, Tavares expressed concern that tariffs on Chinese vehicles imported to Europe and the United States would be a “major trap” for these regions, potentially forcing Western automakers to undergo restructuring to compete with lower-cost Chinese manufacturers. According to Tavares, this restructuring could have severe social consequences, as governments might not be fully prepared to face increased competition.

Moreover, U.S. officials announced plans to impose up to 100% duties on Chinese-made EVs and EV materials by August 1. However, on June 5, the European Commission is expected to announce its initial decision on potential tariffs for Chinese electric vehicle imports, while China is threatening counter-tariffs.

Tavares emphasized that such tariffs could fuel inflation, affecting sales and production in the regions where they are imposed. At the Munich Reuters Events Automotive Europe conference, Tavares remarked, “We are not talking about a Darwinian period; we are in it,” describing the upcoming price battle with Asian rivals as “very tough.”

Additionally, Tavares pointed out the competition’s challenges for European dealers, suppliers, and OEMs. He noted that while many talk about change, they often expect it to impact others rather than themselves. Italy’s nationalist government has been pressing Stellantis to increase vehicle production. Still, Tavares did not directly respond to these demands, instead highlighting the overcapacity looming over the European auto sector.

Chinese automakers are on track to sell 1.5 million vehicles in Europe, capturing a 10% market share that would equate to the production output of up to 10 assembly plants. Tavares warned that if the market share of Chinese OEMs continues to grow, overcapacity is inevitable unless competition is actively fought against.

Despite these challenges, Tavares mentioned that Stellantis is actively engaging in “very rewarding discussions” with labor unions at its European operations. Unions generally agree on the risks and strategies to navigate this competitive period.

Last week, Stellantis announced it would start selling EVs from its Leapmotor Chinese partner outside China, beginning in Europe in September. The Stellantis-Leapmotor joint venture marks the first collaboration between a Western and Chinese carmaker designed to sell and produce EVs from a Chinese manufacturer outside China, aiming to expand Stellantis’ global offerings of budget vehicles. Tavares stated that Stellantis will strive to embody the Chinese culture and align with the Chinese initiative rather than simply defending against it.

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