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Volkswagen's CUPRA brand might face serious implications if the European Commission applies planned import taxes of 21.3%.
An electric vehicle manufactured in China and designed in Spain by Volkswagen’s CUPRA brand would face severe consequences if the European Commission imposes planned import tariffs of 21.3%, the brand’s CEO Wayne Griffiths told Reuters.
The Tavascan, an all-electric SUV priced at around €52,000 ($57,500), would be “wiped out” by the proposed tariffs. Griffiths emphasized that raising the price to offset the tariff costs is not a feasible option, given the current economic climate in Europe.
CUPRA has heavily invested in production capacity at Volkswagen’s Anhui plant in China, a joint venture with JAC Automobile Group. Moving production to another location is not viable after these significant investments.
Without the projected sales of the Tavascan, CUPRA would struggle to meet EU-mandated carbon dioxide reduction targets in 2024, which could result in substantial fines.
These financial penalties could force the company to cut output, potentially affecting employment at its base in Spain. “It puts the whole financial future of the company at risk,” Griffiths said from Barcelona. He added that while the tariffs intend to protect the European car industry, the effect on CUPRA is the opposite.
Griffiths’ comments reflect growing concerns among automakers about the potential negative impact of the EU’s anti-subsidy tariffs.
These tariffs, which come in addition to the EU’s standard 10% duty on car imports, are designed to level the playing field and counter perceived unfair subsidies. However, Beijing has threatened retaliatory measures, including probes into EU imports of dairy, pork, and cognac.
The initial tariff on the Tavascan and BMW’s electric Mini was set at 38.1%, but following protests from both companies, it was reduced to 21.3%. In contrast, the proposed duty for Tesla, which operates a large factory in Shanghai, was lowered to 9% after the U.S. EV maker successfully negotiated a lower duty.
China has been lobbying the EU’s 27 member states to reject the proposed tariffs in an upcoming vote in October. If the duties are imposed, CUPRA can apply for its own negotiated duty, similar to Tesla, but the review process could take up to nine months.
Griffiths stated that CUPRA is engaged in discussions with various levels of the European Commission and the German and Spanish governments to advocate for reducing or eliminating the planned tariffs. CUPRA representatives will also join a Spanish delegation traveling to China in the coming weeks to continue these efforts.
A European Commission spokesperson declined to comment on the situation.
CUPRA’s decision to produce the Tavascan at Volkswagen’s Anhui plant was intended as a “one-off” to quickly bring the product to market. The brand has always planned to build the Tavascan’s successor in Europe.
“We’re not a Chinese brand trying to swamp the European market. Our cars are not for the masses. The car is not a subsidized product,” Griffiths said. “We’re a different animal. That’s what we’re trying to explain.”
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