Europe is expected to announce a similar crackdown on Chinese-made electric cars this week, a month after the United States raised tariffs on them to 100% from 27%. In anticipation of the European tariffs, Volvo said it would shift production of certain models from China to Belgium.
According to an anonymous company official in an interview, London TimesVolvo is moving production of its EX30 electric hatchback and EX90 SUV to Belgium to avoid potentially disruptive tariffs expected to be announced shortly by the European Commission, with sources close to the company saying production of UK-bound models will also move there.
An auto trade war is brewing between China and the West.
Over the past few years, cheap, high-quality Chinese-made EVs have flooded into Europe, where the European Commission claims they are overly subsidized — a charge China denies — and now a trade war is expected to break out.
Chinese automaker Geely is Volvo’s parent company. The EX30 is built at a Geely-owned factory in Zhangjiakou, northern China. The EX90 SUV is built at Volvo’s Daqing plant. Thankfully for the U.S. market, the three-row electric EX90 is also built at Volvo’s Charleston, South Carolina, plant, so it won’t suffer from tariff issues for sales in the U.S. The fate of the China-made EX30 is less clear.
Shifting production of both models to Belgium would mean Volvo would not have to stop selling them in Europe or other markets, something the automaker has reportedly been considering for some time.
Europe is on the brink of a major trade war with China as an influx of cheap Chinese-made EVs threatens domestic automakers. According to a Transport and Environment analysis, one in four EVs sold in Europe this year will be made in China. This includes models from BYD, Polestar, Tesla, MG and others. (The EU is expected to impose low tariffs on Chinese-made EVs from BYD, Geely and Tesla. Reuters.
There is also an ongoing European Commission investigation into anti-subsidy policies for Chinese-made EVs. “Their prices are kept artificially low by huge government subsidies. This distorts our markets,” European Commission President Ursula von der Leyen said in a speech to the European Parliament last year.
But Europe’s entire auto industry appears to be opposed to the impending crackdown on Chinese-made EVs: BMW, Mercedes-Benz and Volkswagen have all spoken out against the tariffs, and HSBC estimates that German carmakers derive 20% to 23% of their global profits from their Chinese operations.
The EX30 is a rare Chinese-made EV that’s also available in the U.S. Volvo has operations in the U.S., including a South Carolina plant that exports similar models, so it would be eligible for tariff refunds, trade law experts said. Reuters started a conversation.
That means Volvo has been able to offset the cost of the tariffs so far: The cost advantages of manufacturing in China have helped the company find a sweet spot at a $36,000 starting price that makes it attractive to cost-conscious EV buyers. But with tariffs on Chinese-made EVs now at 100% instead of 27.5%, it’s unclear whether Volvo will be able to absorb the impact as it once planned.
InsideEVs reached out to Volvo USA last week for clarification on how the new U.S. tariffs will affect the EX30, but has not yet heard back.
Meanwhile, globally, the EX30 has been selling like hotcakes. In the first quarter of 2024, Volvo delivered 14,500 units worldwide. In May alone, Volvo delivered 11,000 units.
Production of the EX30 in Belgium was due to begin in 2025 after the company announced “strong demand” last year. The plant was expected to act as a support to and in addition to production in China. Now, with the looming introduction of tariffs, European production is expected to accelerate.
Time will tell whether Volvo can maintain the EX30’s cheaper $35,000 starting price in European production.
