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Europe\u2019s carmakers haven\u2019t been shy to make their thoughts known on the millions of cheap Chinese electric vehicles flooding the continent, occasionally with somewhat apocalyptic tones. Some have called for steep import tariffs to save the industry, while others are pushing loudly for joint efforts to ramp up homegrown, affordable EVs to fend off the \u201conslaught\u201d.<\/p>\n
Stellantis CEO Carlos Tavares, who oversees brands like Fiat, Alfa Romeo and Peugeot, has been among the most vocal in his warnings.<\/p>\n
And the millions of people linked to the sector might not like what Tavares\u2019s latest ominous comments mean for their livelihoods.\u00a0<\/p>\n
\u201cYou are going to see a huge shift of the supplier base. The sourcing will move from the Western world to the best-cost countries,\u201d Tavares said Wednesday at the Bernstein Strategic Decisions conference.<\/p>\n
\u201cThe EV race has become a cost-cutting race.\u201d<\/p>\n
While he didn\u2019t explicitly say it, Tavares\u2019s comments point to the threat of job losses on the continent.<\/p>\n
Around 13.8 million people directly or indirectly work in the EU\u2019s automotive sector<\/a>, accounting for more than 6% of the bloc\u2019s total employment.<\/p>\n Growing demand for Chinese EVs at the expense of European EVs could reduce labor demand on the continent as drivers vote on price. At the same time, Tavares\u2019s comments suggest those working in the supply chain could be squeezed out by cheaper rivals abroad.<\/p>\n The \u201conslaught\u201d\u2014as described<\/a> by Renault CEO Luca de Meo\u2014of Chinese EVs into Europe has sparked panic among native automakers trying to compete on prices.<\/p>\n Chinese EVs are much more cost-effective than their European competitors, thanks to a combination of state subsidies, lower labor costs and crucial control of the entire EV supply chain, particularly batteries.\u00a0<\/p>\n Given higher sale prices in Europe, this makes the continent extremely attractive to them. By way of illustration, think tank Rhodium Group found that the BYD Seal U was 11-fold more profitable<\/a> in Europe than in its native China.\u00a0\u00a0<\/p>\n The clamor among local automakers to make affordable EVs, while necessary to remain competitive, risks pulling the rug from underneath workers on the continent who have long gotten used to the European industry\u2019s superiority.<\/p>\n The effect of Chinese imports on the continent is beginning to draw comparisons with the effect of Japanese competition and wider globalization on America\u2019s \u201cRust Belt<\/a>\u201d in the 1970s and 1980s, which decimated manufacturing jobs in several states.<\/p>\n Tavares says the hunt for affordability among drivers switching from internal combustion engines to EVs will create a reckoning over price that only the government can help with.<\/p>\n \u201cThe Western world consumer is telling the Western world government, okay, there is the global warming issue, fine, but if you don\u2019t help me, I will not help you,\u201d he said.<\/p>\n The EU is preparing landmark tariffs against Chinese automakers to offset these threats after European Commission President Ursula von der Leyen accused them of \u201cdistorting our market<\/a>\u201d last September.<\/p>\n China is set to begin crunch talks with the European Commission next month over those prospective tariffs, which proponents hope will blunt carmakers like BYD\u2019s price advantage.<\/p>\n The Asian nation hopes to cut a deal with the bloc when they meet in June. One advantage it has is the growing appetite among European automakers to join forces with Chinese EV manufacturers\u2014among them Tavares\u2019s Stellantis. <\/p>\n The manufacturer is set to launch an affordable EV<\/a> in Europe later this year through a partnership with Chinese group Leapmotor. The cars are expected to start at a price tag under \u20ac20,000 ($21,700).\u00a0<\/p>\n Other European carmakers, including Volkswagen<\/a>, have launched their own strategic partnerships with Chinese EV manufacturers. The German group bought a $700 million stake in Xpeng that would allow the pair to develop two EVs together.<\/p>\n In a twist, the changing landscape has made once-protectionist EV bosses, including Tesla CEO Elon Musk<\/a>, much more wary of tariffs than they were just a few months ago.<\/p>\n Tavares himself dismissed Biden administration\u2019s new 100% tariffs on Chinese EVs, introduced the day before his carmaker announced its Leapmotor-backed EV.\u00a0<\/p>\n \u201cProtectionism has a lot of drawbacks. They don\u2019t appear immediately; they appear one after the other,\u201d Tavares said.<\/p>\n To offset the threat of tariffs, Chinese automakers have pledged to build their own European factories<\/a>, which would of course create more automotive jobs for EU workers.<\/p>\n Chinese EV pioneer BYD is setting up a factory in Hungary to build some of its cars on the continent.\u00a0<\/p>\n Whether this would compensate for jobs potentially lost in European-owned car companies, and their local supply chain, is far from clear.<\/p>\n<\/div>\nTariff threats<\/h2>\n
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