PARIS

Chinese state-owned automotive manufacturer GAC is actively exploring options to produce electric vehicles (EVs) in Europe, according to Wei Heigang, the general manager of GAC's international business. This development positions GAC among a growing cohort of Chinese automakers contemplating local production in response to looming European Union tariffs on Chinese-made EVs.

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GAC, one of China's largest automakers, has set an ambitious target of 500,000 overseas vehicle sales by 2030, underscoring its commitment to global expansion. While the company has yet to introduce EVs to the European market, it is poised to make its debut with an electric SUV specially tailored for European consumers at the Paris Auto Show, which begins on Monday.

Despite recent moves by the European Commission to impose tariffs on EVs manufactured in China, Wei expressed optimism about the European market's potential, describing it as "relatively open" and maintaining its importance in GAC's international strategy. "The tariffs issue definitely has an impact on us. However, all this can be overcome in the long term," Wei stated, adding, "I am positive there is going to be a way to get it all resolved."

Wei highlighted local production as a key strategy to mitigate the impact of potential tariffs. "Local production would be one of the ways to resolve this," he explained. "We are very actively exploring this possibility." However, he emphasised that discussions regarding European production are still in their early stages, with the company weighing options between constructing a new manufacturing facility or potentially sharing or acquiring an existing plant.

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The move towards local production in Europe is not unique to GAC, as several other Chinese automakers have announced similar plans in recent months. This trend reflects the growing importance of the European market for Chinese EV manufacturers and their determination to maintain competitiveness in the face of potential trade barriers.

GAC's inaugural offering for the European market, the "Aion V" compact SUV, is scheduled to launch in select European countries by mid-2025. The vehicle boasts an impressive range of 520 kilometres and is expected to be priced competitively at under 40,000 euros (USD 43,748), although the final pricing has not been finalised. Following the Aion V, GAC plans to introduce a small electric hatchback to the European market in late 2025, further expanding its product lineup.

The company's decision to showcase the Aion V at the Paris Auto Show demonstrates GAC's commitment to establishing a strong presence in the European automotive landscape. By unveiling a vehicle specifically designed for European consumers, GAC aims to differentiate itself from competitors and appeal to local preferences and regulations.

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The potential shift towards European production represents a significant step in GAC's global strategy. It not only addresses the immediate concern of tariffs but also positions the company to better understand and respond to European market dynamics, regulations, and consumer preferences. Local production could potentially lead to shorter supply chains, reduced logistics costs, and improved responsiveness to market demands.

Moreover, GAC's exploration of European manufacturing aligns with a broader trend of Chinese companies investing in overseas production facilities. This strategy allows these firms to circumvent trade barriers, localise their operations, and gain a foothold in key international markets.

The automotive industry is closely watching these developments, as the entry of Chinese manufacturers into local European production could significantly impact the competitive landscape. Established European automakers may face increased pressure to innovate and optimise their operations in response to the potential influx of competitively priced Chinese EVs produced within the EU.

As GAC moves forward with its plans, several key questions remain, including the potential location of a European production facility, the scale of investment required, and the timeline for implementation. The company's success in this endeavour will likely depend on its ability to navigate complex European regulations, establish effective supply chains, and build brand recognition in a market dominated by well-established players.

The coming months will be crucial for GAC as it finalises its European strategy and prepares for the launch of the Aion V. The reception of this first offering will provide valuable insights into European consumer preferences and set the stage for GAC's future in the region, potentially influencing its decision on local production.

As the global automotive industry continues its rapid transition towards electrification, GAC's moves in Europe represent just one facet of the evolving international landscape. The company's ability to adapt to local markets while leveraging its Chinese manufacturing expertise will be critical in determining its success in the competitive European EV market.