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East German Automotive Industry Against Tariffs on Electric Cars from China
The East German automotive industry complains about unfair competition with China but rejects the punitive tariffs on Chinese electric cars threatened by the EU. "Yes, the extent of subsidies from the Chinese government towards domestic car manufacturers constitutes clear market distortion," said Jens Katzek, Managing Director of the Automotive Cluster East Germany, to the German Press Agency. Punitive tariffs would not solve the challenges facing the domestic automotive industry.
Innovation instead of Trade Conflict
"Instead of getting into a trade conflict that we cannot win, we should better do our homework," said Katzek. This includes reducing bureaucratic barriers to innovation and making the location more attractive and competitive.
According to figures from the German Association of the Automotive Industry, around 834,000 cars were recently manufactured annually in East Germany, more than half (55 percent) of which were electric cars. Their share is thus more than twice as high as for Germany as a whole. In addition, there are trailers, bodies, as well as vehicle parts and accessories. In East Germany, 266 companies with 20 or more employees are directly assigned to the industry. They generate an annual turnover of 40.9 billion euros.
Tariffs of 20 to Almost 40 Percent Threatened
The EU Commission recently threatened provisional punitive tariffs on electric cars from China. The talk is of 20 to almost 40 percent. Currently, tariffs stand at 10 percent, and the new tariffs are set to be added on top. According to the Commission, the value chain for battery-powered cars in China benefits from unfair subsidies. This threatens manufacturers in the EU with damage. Whether the tariffs will actually materialize is still unclear. They depend on whether an alternative solution can be found with China.
There are fears that China could resort to retaliatory measures against local manufacturers. "To believe that punitive tariffs and a trade conflict between the EU and China will pass by us without a trace is naive," emphasized Katzek. He recalled that three-quarters of the cars built here are exported - including to China. German carmakers also produce in China themselves - 4.4 million vehicles last year. With countermeasures, car imports to China would decrease, and cars produced there by German manufacturers and sold in other countries would become more expensive. In both cases, this means declining production numbers and market shares.
The Volkswagen plant in Zwickau, as a pioneer in electromobility, would not be directly affected by Chinese countermeasures, according to a spokesperson, because no vehicles for the Chinese market are built there. However, the factory, which is purely specialized in electric cars, has been struggling with weak demand for some time. Therefore, the shift to a pure two-shift operation is being accelerated. As early as November, the third shift was canceled for one of the two production lines. The further shift for the plant as a whole will now be completed from August, it was said. According to the information, the production of bodies for Bentley and Lamborghini is exempt.
Volkswagen also rejects tariffs
But the Volkswagen Group also rejects the planned punitive tariffs. "The negative impacts of this decision outweigh the potential benefits for the European and especially the German automotive industry," a spokesperson said. "We have confidence in our products and in our ability to innovate." Free trade and fair trade, as well as open markets, are the basis for prosperity, employment, and sustainable growth worldwide.
In addition to Volkswagen, Tesla also operates a purely electric car factory in eastern Germany. BMW and Porsche produce both electric cars and combustion engines in their factories in Leipzig. Opel's production of the new fully electric version of the SUV Grandland is also being ramped up in Eisenach. The model is to be produced in the future as a combustion engine, hybrid, and electric variant on a common line.
Translated automatically from German.
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