Brussels should not raise tariffs on imported Chinese electric cars, and doing so would risk “retaliation” against international brands in the country, the head of the Volkswagen brand has warned.
The European Commission is investigating electric car imports from China and is widely expected to raise tariffs in the coming months, after a surge in imports threatened domestic producers switching from combustion engine to electric vehicles.
But VW brand chief Thomas Schäfer said: “I don’t believe in tariffs. I want everybody to compete on the same terms.”
“There is always some sort of retaliation,” he told the FT’s Future of the Car Summit.
His comments echo concerns raised by Mercedes-Benz boss Ola Källenius, who in March called on Brussels to cut tariffs on Chinese EVs.
Carmakers such as Stellantis and Renault, which do not have large businesses in China, have been more vocal about the threat of Chinese electric vehicles. However, the probe has faced a backlash from German carmakers that are reliant on China for a significant portion of their sales and profits.
The EU investigation has already sparked criticism of protectionism from Beijing, which claims its companies are simply more competitive. The European boss of China’s BYD previously said the company does not rely on subsidies when manufacturing its vehicles.
At present, Chinese EVs are subject to a 10 per cent tariff when imported to Europe. European carmakers pay 15 per cent when exporting to China, which is part of the reason most German models sold in China are made in the country.
Some Chinese carmakers are exploring manufacturing locally in Europe as well. BYD confirmed in January that it will build a new car plant in Hungary to produce electric vehicles.
The call for higher tariffs also comes as international carmakers who had been dominant in the Chinese market have wrestled with declining sales amid the rise of lower-priced, tech-savvy local brands.
Volkswagen, which previously accounted for almost one in five cars sold in China, has seen its market share in electric vehicles fall to under 5 per cent.
Schäfer told the summit that the German carmaker remained committed to the world’s largest car market over the longer term despite acknowledging that it was unlikely to recover its once dominant position in China.
“It’s a tough market. You need to be on your toes but we are big enough, important enough for China and localised enough in China so there is no reason why we can’t follow the speed,” Schäfer said.
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