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China has directed its automakers to pause significant investments in European countries backing new tariffs on Chinese-made electric vehicles (EVs). This decision follows the European Union's implementation of tariffs as high as 45.3%, which became effective after a divisive year-long investigation.
In a recent meeting held on October 10 by the Ministry of Commerce, representatives from major automakers, including BYD, SAIC, and Geely, were advised to reconsider heavy asset investments in countries that voted in favor of the tariffs, such as France, Poland, and Italy. Conversely, they were encouraged to focus on investments in nations that opposed the tariffs.
This strategic maneuver by the Chinese government aims to leverage negotiations with the EU and seeks to prevent a potential decline in EV exports, which accounted for over 40% of Chinese shipments in 2023. With the U.S. and Canada imposing 100% tariffs on Chinese EVs, a reduction in exports to Europe could exacerbate the overcapacity issues faced by Chinese manufacturers.
Amidst these tensions, European countries like Italy and France are actively seeking investments from Chinese automakers, while also expressing concerns about the competitive pressure from affordable Chinese EVs. Notably, BYD is building a factory in Hungary, which opposed the tariffs, and is considering relocating its European headquarters there to reduce costs.
Chinese automakers were also advised to refrain from individual negotiations with European governments, promoting a unified approach to discussions moving forward.
