European countries want at all costs to attract Chinese manufacturers to their territory. The trade wars between the Old Continent and China will accelerate this process.
The massive arrival of Chinese manufacturers in Europe worries European industry. To fight against the advantageous prices of brands from the Middle Kingdom, the Old Continent will retaliate by increasing customs duties for these brands. A rate which would depend on the subsidies that manufacturers receive in their country. The latest communications indicate taxes of up to 38% more for SAIC, in particular.
This threat has not yet been implemented, but Chinese brands are already arming themselves. And the obvious decision is to come and produce the cars in Europe. This would allow them not to increase prices too much, less than with increased customs duties.
According to the firm AlixPartners, sales of Chinese cars will almost double this year. Enough to make the manufacturers react, who will enter into agreements with European countries.
Negotiations that boil down to subsidies
This is the case of BYD, which has already signed for a factory in Hungary. This country is also betting big on the arrival of Chinese brands. In particular, it signed an agreement with CATL, the Chinese battery giant. To accommodate them, Hungary offers job subsidies, tax cuts and relaxed rules about areas that can welcome foreign investment into the country.
But Hungary is not alone in negotiating. Spain, for its part, has reached an agreement with Chery. Here too, the promises of subsidies from the State must have come into play. Indeed, Spain has a 3.7 billion euro plan to help the production of electric cars. Spain also has an agreement with Envision, which manufactures batteries. And CATL, via a joint venture with Stellantis, should set up a battery factory there.
Other countries want to welcome Chinese electric car manufacturers. Italy is requesting and is negotiating with Chery for a second factory, according to Reuters. In addition, Rome would seek to attract the manufacturer DongFeng into its nets.
The objective for Italy is to revitalize its automotive sector. With a budget of 6 billion euros per year, the country has enough to encourage these decisions. For the moment, no one has wished to comment on these discussions, whether it is the Italian Ministry of Industry, or the Chery and Dongfeng brands.
Germany and Turkey candidates?
Furthermore, the giant SAIC, which is under threat of the highest customs fees, wants to fight back. The group that owns the MG brand is also in discussions with European countries. He would like to deploy no less than two factories on the Old Continent.
SAIC could announce its first European infrastructure as early as this summer. Rumor has it that he is buying an existing factory, with the aim of producing 50,000 cars per year. It appears that SAIC is currently talking to four countries. In addition to Hungary, Italy and Spain, Germany would be in the running. Like its rivals, SAIC does not respond to rumors and leaves doubts lingering.
BYD is also in discussions for a second European factory. The structure in Hungary, which we spoke about previously, is not yet operational. Production should begin there at the end of 2025. But the brand sees Europe as an important market and wants to establish itself there quickly. Last month, a first rumor on this subject established links between BYD and Turkey.
Read also
Tax on Chinese cars: European brands are worried
