As the EU considers imposing tariffs on imported Chinese vehicles, Chinese automakers are preparing to respond strategically.
Among them, Geely, the second-largest Chinese car manufacturer after BYD, is exploring the possibility of expanding its production footprint in Europe. While Geely already has factories in Sweden and Belgium through its ownership of Volvo, this is not enough to cover all of its brands, including Zeekr, Polestar, and Lynk & Co, which is on the verge of launching its electric vehiclein Europe. The goal is to bypass the potential 19.9% tariff that could hit its imports.
Geely’s search for a European production base
According to a Reuters report, Geely is currently in talks with Poland about establishing a joint production plant, with partial state ownership by Poland. This move would align with Poland’s growing attractiveness as a hub for global automotive manufacturing, having hosted Fiat (now part of Stellantis) and Volkswagen factories for years.
Despite this, Warsaw has indicated that Geely may not be an ideal partner, though it has not provided specific reasons. This could be due to a reluctance to further empower a European automaker or perhaps a lack of enticing offers from Geely, which owns several high-profile European brands like Volvo, Polestar, Lotus, 50% of Smart, more than 20% of Aston Martin, and 10% of Mercedes-Benz.
Regardless, Geely is not alone in this venture. Other Chinese automakers, such as BYD, Chery, and Dongfeng, have also started exploring potential production sites in Europe to avoid inflating the prices of their cars. Hungary, Spain, and Italy have been identified as target countries by these automotive giants.
Maybe in Spain?
If Poland rejects Geely’s offer, Spain may emerge as the next potential destination for its production facility.
Spain has become an increasingly attractive location for automotive manufacturing, with companies like Renault, Stellantis, and Volkswagen already maintaining substantial production operations there. The country’s established automotive ecosystem and strategic location make it a key player in Europe’s car manufacturing landscape.
The benefits of producing in Europe
While avoiding tariffs is a clear motivation for Chinese automakers to produce in Europe, the advantages extend beyond trade barriers. Local production allows these companies to reduce transportation costs, avoid the standard 10% tariffs, and make their vehicles even more competitive in terms of pricing.
Moreover, producing cars in Europe enables Chinese manufacturers to meet European safety and environmental standards more efficiently, ensuring their vehicles are fully compliant with the region’s strict regulations.
