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Daniel Ren

Yujie Xue

State-owned carmaker GAC Group plans to set up factories in Europe in an effort to mitigate damage caused by the tariffs imposed on Chinese-made electric vehicles (EVs).
Wei Haigang, the general manager of GAC International, said expansion into Europe is an important part of the Guangzhou-based company’s growth strategy, adding that it expects to bring a large number of electric cars to the European market next year.
“We are reviewing the plans to localise production [in Europe],” he said in Hong Kong on Friday. “A final decision will be made if there is substantial demand.”
GAC International is a subsidiary that focuses on business outside China.
Wei’s remarks came after Bloomberg News reported that authorities in Beijing were pressuring mainland carmakers to refrain from investing in European Union (EU) countries while negotiations over EU tariffs were ongoing, citing unidentified people familiar with the matter.
The report added that the government request was not a mandatory order.
Wei said he was not aware of such a directive from Beijing and GAC is adamant about tapping into the European market – even with the additional tariffs of up to 35.3 per cent that are applied to Chinese-made EVs.
Earlier this month, EU members voted to impose punitive tariffs on Chinese-made EVs following an anti-subsidy investigation that began in September 2023. The duties are on top of the standard 10 per cent tariff applied to pure electric cars made in China. The tariffs will be in effect for five years.
China threatened to levy punitive duties on European products like dairy and pork.
“Setting up assemblies in the European market requires a big investment and the carmakers would suffer huge losses if the cars do not sell well,” said David Zhang, general secretary of the International Intelligent Vehicle Engineering Association. “The Chinese companies must be very careful in assessing the feasibility of their local production plans.”
China is now the world’s largest automotive and EV market. China sales of electric cars accounted for 65 per cent of the global total in the first half of 2024, according to the China Passenger Car Association.
In theory, local plants should enable Chinese EV makers to avoid EU tariffs while helping them build their brands around the world. But industry participants said most of the Chinese car brands have yet to convince foreign customers about their quality and reliability.
“Overseas consumers may be worried about their capabilities in aftermarket services and their financial strength to sustain operations,” said Gao Shen, an independent analyst in Shanghai. “It is reasonable for some of the carmakers to slow down the pace of going global.”
Wei of GAC said a small number of pure electric cars assembled on the mainland would be exported to Europe by the end of the year. EVs made by GAC are subject to a 20.7 per cent additional tariff in the EU.
Chinese carmakers have a huge cost advantage over their global rivals in building EVs, with a fully developed supply chain and strong manufacturing heft, according to Stephen Dyer, Greater China co-leader and head of the Asia automotive practice at global consultancy AlixPartners.
Chinese-made EVs cost 35 per cent less to produce than those made by other carmakers, he said in July.
Analysts said the EU duties were not enough to shut Chinese EVs out because some mainland carmakers would be able to digest the tariffs by taking full advantage of their production advantages.
Shenzhen-based BYD, the world’s largest EV builder, is subject to a 17 per cent punitive tariff. The company has a cost advantage of 25 per cent over traditional brands in the EU, according to a report published by UBS last year.


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Chinese EV maker GAC to invest in Europe even after report that Beijing is against plan

Chinese EV maker GAC to invest in Europe even after report that Beijing is against plan

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}‘A final decision will be made if there is substantial demand,’ GAC says

‘A final decision will be made if there is substantial demand,’ GAC says