Stellantis CEO embraces Chinese strategy to navigate EV tariffs

Stellantis CEO Carlos Tavares is utilising low-cost practices akin to his Chinese electric vehicle (EV) competitors to fight what he terms tariffs set by European and US governments. Addressing a conference hosted by Reuters Events in Munich, Tavares described these tariffs as anti-competitive measures that impoverish the old carmakers at the expense of the competition with Chinese opponents that produce electric vehicles for, roughly, 40 percent less.

To strengthen its partnership, Stellantis bought a 21% stake in Chinese EV maker Leapmotor in October 2021 and set a joint venture that affords Leapmotor’s technology and sales rights for its EVs beyond China to Stellaris. It is similar with other automakers who are now searching for the partners from Chinese suppliers in order to stand firm on the changing market environment.

Leapmotor EVs are already being manufactured at Stellantis’ Tychy site in Poland, in addition to vehicles from traditional Stellantis brands such as Fiat, Jeep, and Alfa Romeo. Tavares stated that there is the possibility of manufacturing Leapmotor vehicles within North America but indicated that the standards of the two regions, Europe and the US, are significantly dissimilar.

Currently, Chinese EVs are being manufactured, more factories are being established and countries are offering subsidies to lure investors in Europe. For example, Volkswagen has partnered with Xpeng to bring affordable EVs to China; many insiders now envision this kind of collaboration as the model for the future of automaker relationships.

Nonetheless, the opportunity of the American market remains challenging, especially as the Biden administration continues to advance a 100 percent tax on BEVs assembled in China and energise American manufacturing with the Inflation Reduction Act. New regulation measures may also impede the extent of Chinese components being in vehicles that are imported into the US; therefore, becoming a challenge for Stellantis.

They also have political considerations because American politicians still heavily criticise the cooperation with Chinese companies, which makes the possible manufacturing plans for Stellantis unclear. The differing stances in Europe and the US for trade paints a bipolar environment for the automakers and while Tavares urged for the removal of tariffs, Farley of Ford see tariffs as crucial for American firms.

As some of today’s markets for EVs emerge, analysts agree that China is going to be a major EV industry irrespective of tariff situation.