The automotive sector is going through months of uncertainty. Chinese manufacturers and their ability to sell electric cars much cheaper than those of their competitors have caused the governments of the European Union and the United States to react, which have approved customs tariffs on imports of these models in an attempt to put an end to competition that they consider unfair. Some surcharges that, in the EU, are not yet definitive. At the same time, the major manufacturers of the Asian giant are taking accelerated measures to produce both in the EU and on the North American market, which would not only save these customs duties, but also allow them to compete side by side with the major local car manufacturers.
In this global scenario, countries are trying to position themselves to get Chinese manufacturers to bet on their territories. One of them, Spain, is fighting to obtain the factories of brands like Polestar or MG, if they finally knock on the door to manufacture in Europe. A path similar to that already taken by Chery, which has kept Nissan’s facilities in the Barcelona free zone, even though its projects have been disrupted precisely because of the tariffs.
Chinese giant Chery reached an agreement last spring to reactivate the old Nissan plant, in collaboration with the Catalan group Ebro. The initial plan was to manufacture 50,000 vehicles in 2027 and reach 150,000 two years later. However, the models that will come off these production lines will not be the ones I thought.
The alliance between Chery and Ebro will postpone by one year the manufacture of the Omoda 5 model, whose production was to start in the coming weeks, in October. This is an off-road vehicle currently manufactured in China and sold from 28,000 euros. It will be replaced by an Ebro model, whose production will start in November, while waiting for Chery to obtain the approval that will make it a European manufacturer, to be assembled on this continent.
The reason for the change, as the company itself has acknowledged, is the tariff. “The regulatory change announced by the European Commission last June, which will affect imports of Chinese electric cars, together with the optimistic forecasts for the Ebro models, have led to a reorientation of production,” the company justified when announcing the change. That is, it will begin operations in the Catalan factory with two Ebro models, the S700 and the S800. The forecast is to reach 15,000 vehicles produced next year.
Manufacturers explore Europe
Other Chinese companies seeking a new passport and that have the possibility of opting for a Spanish passport on the table are Polestar and MG. The latter is one of the best-selling brands in Spain. Specifically, the electric MG MG4 is the third most registered model in Spain this year – behind two Tesla models – with almost 1,900 units, which so far represents almost 6% of plug-in vehicle sales in 2024.
MG is part of the SAIC Motor group and its CEO, Wang Xiaoqiu, was one of the executives met by the Prime Minister Pedro Sánchez during his recent official trip to the Asian giant. A meeting that took place on the eve of MG’s decision on whether or not to launch a factory in the EU.
Something similar is happening with Polestar, which would also be considering establishing itself on the continent – although it has not confirmed it – which would reduce its exposure to customs duties and, in this case, a possible alliance with one of the manufacturers that assembles in Spain, Renault. However, here the French manufacturer throws the ball. It assures that its electric manufacturing center is in France and that it has hybrid manufacturing in Castile and León.
The brand controlled by the Chinese Geely already has a factory in the United States – in South Carolina – from which it can export to Europe without customs duties. Also deciding is BYD, which at the end of 2023 decided to launch a new factory in Hungary.
This acceleration of the landing of Chinese giants within the EU contrasts with the slowdown experienced by European multinationals on their own territory. Nearly a third of the factories of the five largest European automobile groups (Volkswagen, Renault, Stellantis, Mercedes-Benz and BMW) produced below their capacity during 2023, according to information published by the Bloomberg agency. And one of the totems of the European automobile industry, Volkswagen, is considering closures in its home country, which would lead to the first layoffs of the multinational in Germany in its entire history.
While waiting for Chinese companies to take the plunge, Spain has 16 factories, but these are installations of foreign groups, that is, the decision-making centers are not in Spain. At the moment, production is increasing, but very slightly. In the first half of 2023, more than 1.33 million vehicles were manufactured in Spain. This is 1.1% more than in 2023, but still far from the figures for 2019, when production was 13.4% higher.
Rates on both sides of the Atlantic
Brussels will decide in a few weeks what to do with the customs tariffs, whether or not to take protectionist measures to defend itself against state aid that, according to it, generates unfair competition. Precisely, Pedro Sánchez spoke during his trip to China in favor of reconsidering this trade war, because it can harm both economic blocs.
A similar situation is occurring in the United States, although the tariff policy is much more aggressive. In May, the Biden administration announced an increase in tariffs from 25% to 100%. It alleged that Chinese electricity exports to the United States had increased by 70% by 2023 and that it needed to protect American manufacturers from “unfair” practices.
Last week, Washington announced that the new tariffs would go into effect on September 27 and that it would also impose a surcharge on other products, such as solar panels, aluminum and steel.
