BYD’s answer to EU tariffs? Become 'European.'

Chinese car company BYD is setting its sights on becoming a “European company.” The electric vehicle market leader is expanding local European production as it seeks to make further inroads into Europe and sidestep European Union (EU) trade restrictions on Chinese-made vehicles.

“Once you move everything produced locally, it's okay. We become a European company,” Stella Li, BYD's executive vice president said at a commercial vehicle exhibition in Hannover, Germany, on Monday. “For the long term, we will produce everything we sell in Europe here locally.”

China’s Chery Automobile plans to produce its Omoda and Jaecoo vehicles at a former Nissan factory in Barcelona in partnership with Spanish automaker Ebro.

Chinese EV maker Leapmotor is also working with car company Stellantis on plans to begin producing its B10 electric SUVs at a plant in Zaragoza, Spain, by the end of this year.

Europe’s growing EV market is one that Chinese automakers cannot afford to miss. About 1.6 million EVs were sold in Europe in the first half of this year, up 35.1 percent from a year earlier, according to the Korea Automobile & Mobility Association. EV sales in China, by contrast, fell 6.1 percent over the same period. With demand weakening at home, the growing European market has become increasingly important for Chinese automakers.

The EU currently imposes a basic 10 percent tariff on EVs made in China, plus countervailing duties of up to 35 percent to offset Chinese government subsidies.

The European Commission is also pushing for what it terms the Industrial Accelerator Act (IAA). Under the proposed legislation, Chinese companies that invest more than 100 million euros ($115 million) in industries the EU considers strategic, including EVs, would face requirements on local hiring, parts sourcing, research and development and the transfer of technology and skills.

Korean automakers such as Hyundai Motor and Kia are also expanding EV production in Europe. Kia began mass production of the EV2 at its plant in Slovakia in March, following the EV4 last year. Hyundai began producing the Ioniq 3, a compact EV designed for the European market, at its Izmit plant in Turkey last month. Hyundai Motor’s Turkey subsidiary and Hyundai Mobis are also investing 55 million euros in a battery assembly plant at the same site.

“Policies such as the IAA that prioritize production within Europe could put more pressure on Korean automakers to increase local production rather than rely solely on exports,” an industry source said. “As the European market shifts increasingly toward EVs, production at their European plants will inevitably have to shift toward EVs as well.”

BY SUK GYEONG-MIN [[email protected]]