Europe’s automotive industry is bracing itself for a wave of affordable Chinese electric vehicles (EVs) flooding the market, prompting urgent calls for strategic responses. Stellantis CEO Carlos Tavares, who oversees renowned brands such as Fiat, Alfa Romeo, and Peugeot, has been vocal about the potential impact on the continent’s automotive workforce.
European Jobs at Risk
During his address at the Bernstein Strategic Decisions conference, Tavares highlighted a significant shift in the supplier base, moving from the Western world to cost-efficient countries. “The EV race has become a cost-cutting race,” he emphasized, alluding to potential job losses in Europe. Currently, the EU’s automotive sector employs around 13.8 million people, representing over 6% of the bloc’s total employment. As demand for cost-effective Chinese EVs rises, European jobs, particularly in the supply chain, face a substantial threat.
The Chinese EV Onslaught
Renault CEO Luca de Meo described the influx of Chinese EVs into Europe as an “onslaught,” causing concern among local automakers. Chinese EVs are more affordable due to state subsidies, lower labor costs, and control over the entire EV supply chain, including batteries. A Rhodium Group study revealed that the BYD Seal U is 11 times more profitable in Europe than in China, highlighting the continent’s attractiveness for Chinese manufacturers.
This growing competition mirrors the impact of Japanese automakers and globalization on America’s Rust Belt in the 1970s and 1980s, which led to significant manufacturing job losses.
Tariff Threats and Government Intervention
Tavares suggests that achieving affordability in the EV market will require government intervention. “The Western world consumer is telling the Western world government, okay, there is the global warming issue, fine, but if you don’t help me, I will not help you,” he stated.
In response, the European Union is preparing significant tariffs against Chinese automakers. European Commission President Ursula von der Leyen accused Chinese manufacturers of distorting the market last September. Crunch talks between China and the European Commission are set for next month, with hopes of negotiating these tariffs to level the playing field.
Strategic Partnerships and Market Dynamics
Amidst these challenges, European automakers are forming strategic partnerships with Chinese EV manufacturers to remain competitive. Stellantis is set to launch an affordable EV in Europe through a collaboration with Chinese group Leapmotor, with cars expected to start at under €20,000 ($21,700). Similarly, Volkswagen has partnered with Xpeng, investing $700 million to develop new EV models.
Interestingly, the evolving market dynamics have made previously protectionist EV leaders, including Tesla CEO Elon Musk, more cautious about tariffs. Tavares himself criticized the Biden administration’s new 100% tariffs on Chinese EVs, introduced just before Stellantis announced its Leapmotor-backed EV.
Potential European Job Creation
In an effort to counteract the impact of tariffs, Chinese automakers have pledged to establish factories in Europe, potentially creating more automotive jobs for EU workers. Chinese EV pioneer BYD is setting up a factory in Hungary, aiming to produce cars on the continent. However, whether these new jobs will offset the potential losses in European-owned car companies and their local supply chains remains uncertain.
Conclusion
As the battle for the EV market heats up, the European automotive industry faces a challenging future. The influx of affordable Chinese EVs presents both opportunities and threats. Strategic responses, including government intervention and international partnerships, will be crucial in navigating this evolving landscape. The impact on Europe’s 13.8 million auto workers hangs in the balance, making the need for innovative solutions and collaborative efforts more pressing than ever.
Also read: Stellantis and Samsung SDI to Establish $3.2 Billion EV Battery Plant in Indiana
