Stay up to date with free updates
Just register Electric vehicles myFT Digest – delivered straight to your inbox.
Brussels must not increase tariffs on imported Chinese electric cars, otherwise there would be a risk of “retaliation” against international brands in the country, the head of the Volkswagen brand warned.
The European Commission is investigating imports of electric cars from China and is expected to increase tariffs in the coming months after a surge in imports threatened domestic manufacturers’ switch from internal combustion engine vehicles to electric vehicles.
But VW brand boss Thomas Schäfer said: “I don’t believe in tariffs. I want everyone to compete on the same terms.”
“There is always some form of retaliation,” he told the FT’s Future of the Car Summit.
His comments echo concerns raised by Mercedes-Benz boss Ola Källenius, who in March called on Brussels to reduce tariffs on Chinese electric vehicles.
Automakers like Stellantis and Renault, which don’t have major operations in China, have been more vocal about the threat posed by Chinese electric vehicles. However, the investigation was met with backlash from German automakers, which rely on China for a significant portion of their sales and profits.
The EU investigation has already drawn criticism of protectionism from Beijing, which claims its companies are simply more competitive. The European head of China’s BYD previously said the company does not rely on subsidies to produce its vehicles.
Chinese electric vehicles are currently subject to a 10 percent tariff when imported into Europe. European car manufacturers pay 15 percent when exporting to China, which is one of the reasons why most German models sold in China are made in the country.
Some Chinese car manufacturers are also considering local production in Europe. BYD confirmed in January that it would build a new car factory in Hungary to produce electric vehicles.
The call for higher tariffs also comes as international automakers that have dominated the Chinese market are struggling with declining sales due to the rise of lower-priced, tech-savvy local brands.
Volkswagen, which previously accounted for nearly one in five cars sold in China, saw its electric vehicle market share fall to below 5 percent.
Schäfer said at the summit that the German automaker remained committed to the world’s largest car market in the longer term, although he acknowledged it was unlikely to regain its once dominant position in China.
“It’s a tough market. “You have to be on your guard, but we are big enough, important enough to China and sufficiently localized in China that there is no reason why we can’t keep up with the pace,” Schäfer said.