(Reuters) – Stellantis expects a major battle with Chinese rivals in the European electric vehicle (EV) market, warning of significant consequences for jobs and production, the group’s chief executive said on Wednesday , Carlos Tavares.

Tariffs on Chinese vehicles imported into Europe and the United States constitute “a major trap for countries going down this path”, he said in an interview with Reuters.

These customs tariffs will not allow Western car manufacturers to avoid restructuring to meet the challenge of Chinese manufacturers at lower costs, added the leader.

U.S. officials said Wednesday they plan to impose tariffs of up to 100% on EVs and EV materials made in China by Aug. 1.

For its part, the European Commission (EC) will unveil a first decision on June 5 on potential customs duties on Chinese imports of electric vehicles. China threatened to impose tariffs in return.

“When you fight competition to absorb 30% of the competitive advantage in favor of the Chinese, there are social consequences. But governments, European governments, do not want to face this reality now,” said Carlos Tavares.

The leader believes that tariffs will only fuel inflation in the regions where they are imposed, which could impact sales and production.

“We are not talking about a Darwinian period, we are there,” added Carlos Tavares at the Reuters Events Automotive Europe conference in Munich, adding that the price battle with its Asian competitors will be “very tough”.

“It’s not going to be easy for dealers. It’s not going to be easy for suppliers. It’s not going to be easy for OEMs. As we know in Europe, everyone talks about change as long as change is for someone else,” he said.

Chinese automakers are already on track to sell 1.5 million vehicles in Europe, equivalent to a 10% market share and production at up to 10 assembly plants, Carlos Tavares said.

“If we allow the share of Chinese equipment manufacturers to grow, it is obvious that we will create overcapacity, unless we fight against this competition,” he said.

Carlos Tavares indicated that Stellantis was having “very enriching discussions” with the unions of its operations in Europe.

Last week, Stellantis announced the start of sales of its Chinese partner Leapmotor’s EVs outside China later this year, starting in Europe in September.

The Stellantis-Leapmotor joint venture – the first between a Western and Chinese automaker designed to sell and produce EVs from a Chinese manufacturer outside China – will help the Franco-Italian group expand its global offering of low-cost vehicles.

“We will try to be Chinese ourselves, which means that instead of being purely defensive against the Chinese offensive, we want to be part of the Chinese offensive,” Carlos Tavares said.

(Reporting by Joseph White and Christoph Steitz, with contributions from Giulio Piovaccari in Milan; Lina Golovnya, edited by Blandine Hénault)

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