Chinese EV Factories in Europe Evade 45.3% Tariffs, Threatening 350,000 Supplier Jobs
Chinese EV makers like BYD and MG are building factories in Hungary, Spain, Austria, and Portugal to dodge 45.3% EU tariffs, enabling tariff-free, lower-priced sales in…
Europe's auto suppliers warn that 350,000 jobs are at immediate risk as Chinese rivals build local EV plants to sidestep 45.3 percent tariffs. These facilities allow brands like BYD and MG to sell vehicles tariff-free at lower prices to European customers. The European Association of Automotive Suppliers (CLEPA) points to a Roland Berger study forecasting these losses by 2030 due to powertrain shifts and value migration outside the EU. Suppliers have already slated 104,000 job cuts for 2024-2025.
BYD has initiated trial production at its Hungarian plant this year, aiming for full capacity of 200,000 vehicles annually by the second quarter. The company is also eyeing potential sites in Spain and Portugal. Spain is attracting significant interest, with MG planning a factory, Leapmotor set to begin assembly in Zaragoza from late 2026, Chery preparing to produce vehicles in Barcelona, and Hongqi in talks for the Zaragoza site. Meanwhile, XPeng and GAC Aion are manufacturing at a plant in Austria.
These local production facilities enable Chinese brands to sell EVs tariff-free within Europe, undercutting European suppliers on pricing.
In response, CLEPA is advocating for stricter regulations, including a requirement that 70 percent of a vehicle's value be sourced locally to qualify as 'European-made' for public procurement and subsidies. The group also wants to lower the threshold for scrutinizing foreign investments from €100 million to €30 million.
While such measures could increase EV component costs for consumers, potentially offsetting the price advantage of locally produced Chinese models, CLEPA anticipates no significant price increases in the immediate term. The European Automobile Manufacturers' Association (ACEA) opposes rigid local content mandates, citing Europe's high energy costs. The European Parliament and Council are set to review the Industrial Accelerator Act in the coming weeks.