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East German car industry against punitive tariffs for e-cars

A model of the new generation of the ID.3 is assembled at the Volkswagen plant in Zwickau / Photo: Hendrik Schmidt/dpa/Archivbild
A model of the new generation of the ID.3 is assembled at the Volkswagen plant in Zwickau / Photo: Hendrik Schmidt/dpa/Archivbild

The East German automotive industry is making progress with the switch to e-cars. Nevertheless, the industry rejects punitive tariffs against competitors from China, as planned by the EU. What are the reasons?

The East German automotive industry complains about unequal competition with China, but rejects the EU's threat of punitive tariffs on Chinese e-cars. "Yes, the extent of the Chinese government's subsidies to domestic car manufacturers is a clear distortion of competition," Jens Katzek, Managing Director of the Automotive Cluster East Germany, told the German Press Agency. Punitive tariffs would not solve the challenges facing the local automotive industry.

Innovation instead of trade conflict

"Instead of entering into a trade conflict that we cannot win, we would be better off doing 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 in eastern Germany each year, more than half (55 percent) of which were electric cars. Their share is therefore more than twice as high as for Germany as a whole. Added to this are trailers, bodies and vehicle parts and accessories. In eastern Germany, 266 companies with 20 or more employees are directly attributed to the sector. 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 e-cars from China. There is talk of 20 to almost 40 percent. Up to now, the tariffs have been 10 percent; the new tariffs are to be added. According to the Commission, the value chain for battery-powered cars in China benefits from unfair subsidies. This threatens to harm manufacturers in the EU. It remains to be seen whether the tariffs will actually be imposed. They depend on whether a solution can be found with China elsewhere.

There are fears that China could retaliate against local manufacturers. "To believe that punitive tariffs and a trade conflict between the EU and China will pass us by without a trace is naive," emphasized Katzek. He pointed out that three quarters of the cars built in Germany are exported - including to China. German car manufacturers also produced 4.4 million vehicles in China themselves last year. If countermeasures are taken, the import of cars to China will fall and cars produced there by German manufacturers and sold in other countries will become more expensive. In both cases, this would mean falling production figures and market shares.

A spokesperson said that the Volkswagen plant in Zwickau, a pioneer in electromobility, would not be directly affected by Chinese countermeasures, as no vehicles are built there for the Chinese market. However, the factory, which specializes purely in e-cars, has been struggling with weak demand for some time. For this reason, the switch to a pure two-shift operation is being accelerated there. The third shift for one of the two production lines was already canceled in November. The further changeover for the plant as a whole will now be implemented from August, it was reported. According to the information, the production of car bodies for Bentley and Lamborghini is excluded.

Volkswagen also rejects tariffs

However, the Volkswagen Group also rejects the planned punitive tariffs. "The negative effects of this decision outweigh the potential benefits for the European and especially the German automotive industry," explained a spokesperson. "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 an all-electric car factory in eastern Germany. BMW and Porsche produce both e-cars and combustion engines in their factories in Leipzig. Production of the new all-electric version of the Grandland SUV is also being ramped up at Opel in Eisenach. In future, the model is to be manufactured as a combustion, hybrid and electric variant on a joint line.

Copyright 2024, dpa (www.dpa.de). All rights reserved

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