An electric vehicle brand owned by Volkswagen would be “wiped out” by proposed European Union tariffs aimed at China, according to a top executive at the car giant.
Models in Volkswagen’s Cupra brand are designed in Spain but include cars made in China, which would face tariffs of 21.3pc under proposals from the European Commission.
Raising the price of the Cupra Tavascan, an all-electric SUV selling for around €52,000 euros (£43,800), was not an option in the current European economic environment, said Wayne Griffiths, who is chief executive of Volkswagen’s Seat and Cupra brands. It means Volkswagen would be unable to cover the additional costs.
Mr Griffiths said that moving production to another location was unviable because the company had already invested in building up capacity at Volkswagen’s Anhui plant, a majority-owned joint venture with China’s JAC Automobile Group.
Without the projected Tavascan sales, Cupra would miss EU-mandated carbon dioxide reduction targets next year and face heavy fines, Mr Griffiths claimed, forcing it to cut output with a possible impact on employment at its base in Spain.
Speaking from Barcelona, he said: “It puts the whole financial future of the company at risk.
“The intention was to protect the European car industry but for us, it’s having the opposite effect.”
“We’re not a Chinese brand trying to swamp the European market. Our cars are not for the masses. The car is not a subsidised product. We’re a different animal.”
The comments came a day after Volkswagen said it was considering closing factories in Germany for the first time in its 87-year history. The company is racing to cut costs amid increasing competition and the establishment of EU factories by lower-cost Chinese giants.
Mr Griffiths’ remarks are the strongest yet by a carmaker affected by the tariffs, highlighting worries that Brussels will hurt the very domestic players it is trying to protect.
The new tariffs are on top of the EU’s standard 10pc duty on car imports, a measure the Commission says is aimed at levelling the playing field and countering what it regards as unfair subsidies.
The Tavascan, such as BMW’s electric Mini, was initially hit with a 38.1pc tariff in Brussels’ plans, prompting protests from both companies.
The tariff on both cars was reduced to 21.3pc last month.
At the same time, Brussels lowered its proposed duty for Tesla, which has a major factory in Shanghai, to 9pc, the lowest of all the duties, after the US electric car maker entered negotiations.
If duties are imposed, Cupra can request its own negotiated duty, as Tesla has. A review of the rate would last up to nine months.
German carmakers such as Volkswagen are heavily exposed to possible counter-tariffs by China on large engine car imports. China accounts for about a third of their sales. While most cars sold in the country are made locally, many top-end models are imported.
The European Commission was approached for comment.
