Volvo has started shifting production of Chinese-made electric vehicles to Belgium, expecting the European Union to continue a crackdown on Beijing-subsidized imports.
The Sweden-based company is seen as the most exposed among Western carmakers to controversial plans to impose tariffs on a flood of cheap electric vehicles coming to Europe from Chinese factories.
Company insiders said Volvo, itself owned by Chinese carmaker Geely, was considering plans to halt sales of Chinese-built electric vehicles bound for Europe if tariffs were imposed. Shifting production of Volvo’s EX30 and EX90 models from China to Belgium is expected to negate the need for the company to do so. The production of certain Volvo models destined for Britain could also do so be moved to Belgium. Sources close to the company stressed that suspending sales of Chinese-made electric vehicles is no longer being considered.
The revelations come as the EU is on the brink of a major trade war with China, which will have serious financial consequences for German carmakers.
The European Commission launched a consultation to impose tariffs on Chinese EV imports, amid claims the manufacturers were undercutting Western rivals thanks to the support of huge state subsidies. A decision is expected this week.
Volvo stressed that it was “premature” to draw conclusions about the European Commission’s investigation and any action the carmaker would have to take if trade barriers were imposed. “We are monitoring the EC investigation and cannot comment further until a decision has been made by the EC,” a spokesperson said.
The European Commission launched an anti-subsidy investigation into the import of electric cars from China in October. Unusually, it was initiated unilaterally by the committee, rather than following a complaint from a company or sector.
Ursula von der Leyen, the president of the European Commission, warned that the EU is being “flooded” with cheap Chinese imports, with prices kept artificially low by “huge state subsidies”. Analysts at HSBC said the subsidies give manufacturers a cost benefit of about 30 percent.
The EU currently imposes a 10 percent tariff on Chinese-made electric vehicles. Experts say this could be between 25 and 30 percent. The US recently announced plans to increase tariffs on electric car imports from China from 25 percent to 100 percent.
The move worries Western carmakers, who are the largest importers from China due to the country’s large factories. Tesla is the largest importer from China to the EU, but the American company has indicated that it will stop such actions this year.
Analysts said Volvo would be most exposed to the EU’s actions in the medium term. However, it is now believed to be moving at pace to avoid imposing taxes that would make the £33,795 EX30 in particular unprofitable if it were still made in China.
And while EU tariffs threaten Western car production in China, experts say companies like BYD and SAIC will not be deterred.
Will Roberts, head of automotive research at Rho Motion, told a conference in Paris last week: “As EU leaders consider what level of tariffs to impose on Chinese EV makers, they will weigh the fact that a tariff of 30 percent might not hit the mark on profitability for some key manufacturers.”
There is also the threat of retaliation by Beijing. HSBC estimated that German carmakers generate between 20 and 23 percent of global profits in China. Meanwhile, China has a stranglehold on EV battery production, with a 60 percent market share.
Roberts said: “The response and fallout could lead to a trade war, which would be devastating for a region still heavily dependent on Chinese-dominated supply chains to achieve its lofty climate goals.”
Aston Martin owner Lawrence Stroll completed a £1.15 billion refinancing for the company in March
BENOIT TESSIER/REUTERS
Aston employees will work less for higher wages
Aston Martin has struck a pay deal with unions to work less but get paid more as its rivals struggle with industrial disputes and strikes. About 2,500 workers will receive a 4 percent pay increase, with production technicians promised a further 1.5 percent increase in 2025, in addition to having their working week cut by an hour.
Aston, chaired by flamboyant Canadian billionaire Lawrence Stroll, will also offer staff a £1,000 bonus and shares in the FTSE 250 company.
The deal comes as fellow luxury British carmaker Bentley faces the threat of industrial action at its Crewe factories. The Volkswagen Group-owned company has angered members of the Unite union with plans to change sick pay rules, scrap bonuses and use temporary workers.
Ford executives in the UK, meanwhile, are set to embark on strike action this month in a similar move over wages. An overtime ban by Unite members in Dunton, Stratford, Dagenham, Daventry and Halewood will come into effect at the end of next week. Strikes have also been threatened.
Stroll picked up Bentley boss Adrian Hallmark in March to become the company’s third CEO in four years. The Canadian, who also owns the Aston Formula 1 team, is confident he can turn around the Gaydon-based carmaker’s fortunes after a difficult few years since the company launched in London in 2018.
On the first day of trading, the shares were priced at £19 each, valuing the company at £4.3 billion. They are now worth £1.64 and while the sell-off has largely stabilized since Stroll took the helm in April 2020, fears of mounting debt have dogged the company.
Aston also completed a £1.15 billion refinancing in March, hoping it would ease lingering fears over the company’s pile of loans.
Commenting on the new pay deal, Simon Smith, Chief People Officer at Aston Martin, said: “This agreement also promotes talent retention and provides job security for the company as we enter a key period of production, with the ramp-up of new models that will meet the company’s financial targets support the company in 2024.”
A Unite representative said the pay deal “furthers the working relationships built with Aston Martin, along with delivering a substantial pay increase and improvements to our members’ work-life balance”.