Trade barriers on Chinese EVs a 'big trap', says Stellantis CEO

Placing 100 percent tariffs on Chinese cars, as the United States has just done, is a "huge trap", the head of the Stellantis automobile group said Thursday.

"When you put a bubble around a market, whether it is the American market or the European market, the first thing you do is create massive inflation within the bubble," said Carlos Tavares, whose group includes brands from France (Peugeot, Citroen), Italy (Fiat, Alfa Romeo) and the United States (Chrysler, Dodge, Jeep).

"And when you create inflation, you hurt the purchasing power of the middle class and you accentuate the technological gap between those within the bubble and those outside who are busy conquering the world," he said in an interview on French television.

On Tuesday, US President Joe Biden announced the quadrupling of customs duties on Chinese electric cars to 100 percent.

The same day, Stellantis agreed to form a joint venture with its Chinese partner Leapmotor to manufacture electric cars that will be exported to France, Italy, Belgium, the Netherlands, Germany and Spain starting in September.

The European Union in September 2023 opened an investigation into Chinese subsidies for electric vehicles, accusing Beijing of distorting competition.

To get around any possible trade barriers, Leapmotor plans to produce cars in Europe, following fellow Chinese makers BYD, which has announced a new factory in Hungary, and Chery, which plans to manufacture in Spain.

By producing in Europe, they will be eligible for French government programmes that subsidise the sticker price of electric cars, making them more affordable.

Asked whether the agreement did not amount to "bringing the wolf into the sheep pen", Tavares said Leapmotor sales in Europe would result "in profits for Stellantis, which then pays taxes in France and Europe."

"We did not wait until there were Chinese manufacturers who were big enough to buy Western manufacturers," he argued.