Carlos Tavares, CEO of Stellantis, has stated that the automotive group might close some of its plants due to fierce competition from Chinese manufacturers, who continue to expand in Europe and other global markets. The Portuguese manager’s words create further concern, considering that the current situation of the automotive group is not at its best.
Stellantis factories at risk due to Chinese electric cars
The reason behind this possible “tragedy” is the tariffs on Chinese electric cars. Contrary to what is thought, imposing tariffs on Chinese electric cars will only further complicate the global automotive market in several ways. Firstly, according to Stellantis and other European manufacturers, such as German ones, tariffs create a barrier to free competition, which will backfire on European consumers and producers.
“Closing borders to Chinese products is a trap,” Carlos Tavares told the French newspaper Les Echos. Since Chinese electric cars imported into Europe will be subject to a tax of up to 45%, Chinese car manufacturers could circumvent them by opening factories in Europe. However, these could be financed with state subsidies in countries with lower costs.
Car manufacturers like BYD had already foreseen this possibility and are about to start some plants in Europe, including one in Hungary. Consequently, electric vehicle prices will not change. “If the Chinese manage to gain a 10% market share in Europe, it means they will produce 1.5 million cars. European manufacturers will then be forced to close their plants or sell them to the Chinese,” Tavares said.
“Volkswagen was the first, announcing the closure of some plants in Germany. On our part, there is no reason to accept a worsening of our performance if Chinese manufacturers advance in Europe, even if we maintain the number of cars needed to make fixed costs profitable below the 50% threshold,” Tavares continued.
Following Stellantis’ difficulties in North America and Europe, Carlos Tavares has reorganized the management team, in addition to announcing that he will retire at the end of his term in 2026. “The unanimous support of the board of directors and Chairman John Elkann allows me to work serenely until the end of my contract in early 2026,” Tavares concluded.