The Chinese government has reportedly asked local automakers to pause expansion plans in Europe due to the European Union’s import tariffs on electric vehicles (EVs) from China.
According to people familiar with the matter, the Chinese government told local automakers to pause active searches for production sites in Europe and the signing of new deals in the region. Chinese automakers were also told to keep a low profile while the government negotiates with the European Union over its tariffs on EV imports made in China.
Bloomberg reports that the Chinese government’s advice to local automakers is not a mandatory order. However, it may increase the tension between China and Europe.
Earlier this month, the European Commission received enough support from EU member states to impose additional tariffs on China-made electric vehicle imports. Based on recent reports, the tariffs are expected to reach a maximum of 45%. The tariff rate will be added to the currently imposed 10% rate on imports. A few companies, like BYD, Geely, SAIC, and Tesla, have received individual tariff rates–usually lower than the maximum.
A few Chinese automakers have been thinking of establishing production sites in Europe. China’s top EV automaker, BYD, has already expanded into Europe. In July, BYD signed a Memorandum of Understanding with Ayvens in Europe to help distribute the Chinese automaker’s electric and light commercial vehicles to corporate and retail customers. BYD also reportedly has plans to buy Hedin Electric Mobility, a car distributor in Germany.
BYD isn’t the only Chinese automaker with expansion plans in Europe. In September, Geely was reportedly considering local production in Europe and was scouting locations for a plant in the region. Meanwhile, another Chinese automaker, Leapmotor, took a different approach and partnered with Stellantis. In June, Leapmotor started producing its T03 compact EV at Stellantis’ plant in Poland.
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