The European Union has taken one of the last steps to lift permanent tariffs on electric cars arriving from China. It must be remembered that, until now, what is applied are temporary compensatory duties that will be ratified when the European Commission proposal is approved.
These trade barriers come after months of talks between states and, for now, remain open with China. In that confrontationFrance has taken up the flag of protectionism and the commitment to local production of future electric cars.
Germany, however, has ended up going over to the opposite side. The German country was already doubting whether to continue supporting this measure but in recent days pressure from its manufacturers had intensified so that these trade barriers did not go ahead. This, coupled with Germany’s huge economic dependence on other industries, pushed the German government to say “no” in the latest vote in the European Parliament.
In that group, Germany met Hungary, Malta, Slovenia and Slovakia. The largest group was that of abstention, where Spain joined Portugal, the Czech Republic and Greece. This last country could be key in the vote if only a few States ended up voting in favor of the tariffs, but this was not the case because France also found support from Italy, Poland, the Netherlands and Ireland, among others.
Stopping tariffs on Chinese electric cars now seems almost impossible. To stop them, both in last week’s vote or in the European Commission’s proposal, it is necessary that at least 15 countries representing 65% of the European population give their refusal. Figures that without the support of countries like France, Italy or Spain, with large populations, seem difficult to achieve.
All this has its direct repercussions about European manufacturers. At the moment, electric cars that are lower priced or have a lower cost than the competition arrive from China. It happens to the Dacia Spring, which already has plans to come to Europe. Also the Tesla Model 3, imported from Shanghai and which is also affected by tariffs, although to a lesser extent than Chinese rivals. The same thing happens with the Volvo EX30, another of the best-selling electric cars in Europe.
And, of course, it happens to German manufacturers. Volkswagen is, by far, the most affected firm because they target a less wealthy audience than Audi or BMW. On their roadmap they had the production of a 25,000 euro electric car that would give them a boost to sales that, over time, have stagnated. The 20,000 euro electric car should arrive a little later.
Now you have several problems. It will not carry the Volkswagen logo and cannot be produced in Germany.
The cheap electric car is very complicated if it is European
What should be the key to the popularization of the electric car is being a real headache for Volkswagen.
Volkswagen has been talking about a 20,000 euro electric car for years. In this way, it has set a floor for the launches that are to come and has exemplified the Price increase that we have experienced in the automobile market.
But, in the same way that they have been talking about them for years, there have also been reports in which the plans were discarded or exemplified how complicated the matter was.
In 2022, for example, the company already pointed out that we would not see this vehicle manufactured on the expected dates. “If you look at price increases, you can quickly move on from the desirable 20,000 euros to 25,000 euros“, explained Thomas Schäfer, head of Volkswagen at that time after the departure of Herbert Diess, to the German media. electrified.
The passage of time has confirmed that the transition to electric cars is making things really complicated for the German automobile group, to the point that a savings plan of 10 billion euros has been launched. Then there was already talk of layoffs that, little by little, are taking shape.
To try to make electric cars cheaper and make them competitive despite producing them in Europe, Volkswagen has sought allies such as Renault, with whom it held talks at the end of 2023 but which did not end up reaching a successful conclusion. Likewise, it has tried to ally with Chinese companies to save costs in software development. One of them is Xpeng, which, in fact, is also looking for land in Europe.
But what is beginning to seem clear is that Volkswagen’s cheapest electric car will not be manufactured in Germany. The country, which has one of its largest industries in the automotive industry, is beginning to suffer from its high labor costslosing competitiveness to produce the lowest cost vehicles for the customer.
The last example is collected in the newspaper Spiegelwhere it is stated that Volkswagen is not considering producing its 20,000 euro electric car (announced again for 2027 a few months ago) in Germany. Portugal, the Czech Republic and Poland seem to have every chance of winning the jackpot.
What, on the contrary, seems ruled out is that Volkswagen sends its electric cars to its Zwickau and Emden plants, despite the fact that both are working at half throttle to adapt their production to the company’s demand for electric vehicles, which warned A few weeks ago it expected a significant drop in its production.
And, what’s more, as was already hinted at a few months ago, it will not be Volkswagen that produces the lowest-priced electric car either. At that time there was talk of brands like Skoda, Seat o Cupra and, finally, it seems that it will be the Czech brand that will produce the aforementioned more affordable car if the information from the German media is confirmed. At least on a first launch.
It will be in the jump to the 25,000 euro car when the Volkswagen emblem does come into play. In this case, Martorell is the plant chosen to produce the Volkswagen group’s smaller and cheaper electric vehicles, as already announced in 2022 during the presentation of the project. The proximity of the Sagunto plant is key here.
The choice of the plant is key because the strategy is expected to be the same as that designed for Martorell. That is to say, whether it is located in Portugal, the Czech Republic or Poland, it is expected that the group’s new electric vehicles will be assembled in the same place, although up to three or four brands leave through the same doors.
What is clear is the weakness that Germany has in producing this type of automobile. This summer it was confirmed that the Opel Frontera for less than 25,000 euros will be manufactured in Slovakia. “We cannot manufacture it in Germany for that price,” Stellantis executives stated at the time.
The suspects are the usual ones: energy and labor costs. According to Stellantis data, manufacturing the car in the German country is twice as expensive than to do it in France if only energy costs were taken into account. “Labor costs are also high,” they specified then.
It is no coincidence that Volkswagen or Stellantis are looking at countries where the minimum wage is between 9,179 euros per year in the Czech Republic and 12,100 euros per year, passing through 11,480 euros per year in Portugal, and above all very far from the 24,648 euros per year that are mandatory in Germany.
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