The European Union is weighing a potential rollback of tariffs on electric vehicles imported from China, with Cupra’s Tavascan model taking center stage in ongoing negotiations. The move could open the door for broader tariff reductions affecting brands like MINI, Smart, and Volvo, all of which rely on Chinese manufacturing for certain models.
The Tariff Dispute
Currently, Chinese-made EVs face a 20.7% countervailing duty on top of the standard 10% tariff. This policy, designed to level the playing field, has drawn criticism from industry leaders and regional governments. Salvador Illa I Roca, president of Catalonia, urged the EU to “reconsider the tariffs,” citing the strategic importance of Cupra’s investment in a Barcelona battery plant.
Cupra’s Lobbying Efforts
Cupra has actively lobbied for tariff removal, proposing an annual import quota and minimum price floor in exchange for relief. The Tavascan, which starts at €44,010 in Spain (vs. £47,350 in the UK), would benefit directly. Seat-Cupra CEO Markus Haupt reports “conversations are on a very good level,” with a “positive answer” expected within one to two months. However, he anticipates minimal price reductions for consumers, as the primary impact would be on Cupra’s profit margins.
Wider Implications for European Brands
Several European automakers assemble vehicles in China, including Dacia, Polestar, and Lotus. Each case would require individual EU assessment due to varying ownership structures and production arrangements. MINI, in particular, faces uncertainty. BMW paused plans to build the electric MINI hatch in Oxford, potentially delaying the move if tariff relief boosts margins on Chinese imports – which could come with quota restrictions.
Avoiding Tariffs Through Relocation
Some brands are preemptively shifting production to avoid tariffs altogether. Volvo has moved EX30 production to Belgium, while Dacia plans to relocate Spring EV manufacturing to Slovenia by 2026. Geely-owned brands like Polestar and Lotus also rely on Chinese manufacturing, as does the Smart range, co-produced with Mercedes in China.
Why China for Production?
Volkswagen Group opted for Chinese production of the Tavascan due to capacity constraints in Europe. The model is assembled in a joint venture with JAC Motors, also sold as the ID.UNYX domestically. Cupra CEO Markus Haupt acknowledged the tariff situation was unexpected but maintains that relocating production is not currently feasible. His firm is pushing for tariff elimination as the most viable solution.
The EU’s decision will set a precedent for future trade relations with China in the automotive sector. The outcome will influence production strategies, pricing models, and the competitiveness of European EV brands in a rapidly evolving market.
