Stellantis CEO Tavares says electric vehicle tariffs are a trap

Stellantis expects a major battle with Chinese rivals in the European market for electric vehicles (EVs) and expects significant consequences as a result, the group's CEO Carlos Tavares said on Wednesday.

Tariffs on Chinese vehicles imported to Europe and the US are “a major trap for the countries that go on that path” and will not allow Western carmakers to avoid restructuring to meet the challenge from lower cost Chinese manufacturers.

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

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

The European Commission will unveil an initial decision on potential tariffs on Chinese EV imports on June 5 and the US has said it will impose 100% duties to bar shipment of Chinese EVs. China has been threatening counter tariffs.

“When you fight against the competition to absorb 30% of cost competitiveness edge in favour of the Chinese there are social consequences. But the governments, the governments of Europe, they don't want to face that reality now.”

Chinese carmakers 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, Tavares said.

“If we let the share of the Chinese OEMs grow it's obvious you are going to create an overcapacity unless you fight against that competition,” Tavares said.

Stellantis is in “very rewarding discussions” with labour unions at its European operations, he said. “Most of the time they agree with us [on] what is the risk we face and how we should go through that period.”