Feb 7, 2025
VW's Seat cautions that jobs could be jeopardized if the EU does not reduce tariffs on SUVs manufactured in China.
Volkswagen Group's Seat brand will be required to reduce production and lay off about 1,500 employees if the EU does not decrease its tariff on the Cupra Tavascan electric car manufactured in China by the end of March, according to CEO Wayne Griffiths in an interview with Reuters.
Since October, when the European Union imposed tariffs on all electric vehicles from China sold in Europe, Seat, which produces vehicles under both the Seat and Cupra brands, has been incurring an additional 20.7 percent charge on top of an existing 10 percent tariff for the Tavascan made at VW Group's mainly-owned facility in Anhui, China.
Executives from various European automotive companies have expressed that the additional tariffs on their China-made models are adversely affecting local businesses and jobs, which contradicts the intended purpose of these protective measures.
Griffiths mentioned that this charge, applicable to a vehicle priced at approximately €50,000-€60,000, led the subsidiary to fall short of its financial goals last year and will result in hundreds of millions of euros in losses in 2025.
"We do not have much time. We need to find a solution within the first quarter," Griffiths stated during his interview with Reuters.
The European Commission has opted not to comment on the matter.
Seat and Volkswagen Group executives have been in frequent discussions with EU officials regarding the Tavascan's situation, the latest of which took place on February 6. Spain’s Prime Minister Pedro Sanchez has also reached out to Commission President Ursula von der Leyen, urging her to address the situation to prevent significant job losses, as noted by a Seat spokesperson.
Griffiths refrained from specifying what tariff level the carmaker could manage, but emphasized the need for it to be "as close as possible" to the original 10 percent.
How will Seat achieve EU CO2 targets without the Tavascan?
If the additional tariff is not lowered or eliminated in the first quarter, Seat will have no choice but to remove the financially unviable vehicle from its lineup, Griffiths indicated.
This would create another challenge for the subsidiary: finding a way to reduce average fleet emissions to comply with EU targets without the Tavascan.
Automakers can either purchase carbon credits from electric vehicle manufacturers, a process known as "pooling," or decrease the production of combustion-engine vehicles to reduce their average emissions.
Thus far, the VW Group has abstained from participating in a pool, expressing in December that it aims to close its emissions gap through electric vehicle sales.
"We cannot resolve that overnight," Griffiths remarked. "So what do you do? Reduce combustion-engine output and begin laying off employees. That is what will happen if we cannot find a solution."
Tesla, BMW, Mercedes-Benz, and several Chinese electric vehicle producers have challenged the new tariffs in Europe’s Court of Justice. However, these cases typically take about 18 months and can be appealed.
Seat's CEO stated that while they are not ruling out legal action, they also cannot afford to wait.
"Cupra is our game-changer — it is what has driven our profitability as a business," Griffiths explained. "If Cupra is at risk, then Seat is at risk."
Since October, when the European Union imposed tariffs on all electric vehicles from China sold in Europe, Seat, which produces vehicles under both the Seat and Cupra brands, has been incurring an additional 20.7 percent charge on top of an existing 10 percent tariff for the Tavascan made at VW Group's mainly-owned facility in Anhui, China.
Executives from various European automotive companies have expressed that the additional tariffs on their China-made models are adversely affecting local businesses and jobs, which contradicts the intended purpose of these protective measures.
Griffiths mentioned that this charge, applicable to a vehicle priced at approximately €50,000-€60,000, led the subsidiary to fall short of its financial goals last year and will result in hundreds of millions of euros in losses in 2025.
"We do not have much time. We need to find a solution within the first quarter," Griffiths stated during his interview with Reuters.
The European Commission has opted not to comment on the matter.
Seat and Volkswagen Group executives have been in frequent discussions with EU officials regarding the Tavascan's situation, the latest of which took place on February 6. Spain’s Prime Minister Pedro Sanchez has also reached out to Commission President Ursula von der Leyen, urging her to address the situation to prevent significant job losses, as noted by a Seat spokesperson.
Griffiths refrained from specifying what tariff level the carmaker could manage, but emphasized the need for it to be "as close as possible" to the original 10 percent.
How will Seat achieve EU CO2 targets without the Tavascan?
If the additional tariff is not lowered or eliminated in the first quarter, Seat will have no choice but to remove the financially unviable vehicle from its lineup, Griffiths indicated.
This would create another challenge for the subsidiary: finding a way to reduce average fleet emissions to comply with EU targets without the Tavascan.
Automakers can either purchase carbon credits from electric vehicle manufacturers, a process known as "pooling," or decrease the production of combustion-engine vehicles to reduce their average emissions.
Thus far, the VW Group has abstained from participating in a pool, expressing in December that it aims to close its emissions gap through electric vehicle sales.
"We cannot resolve that overnight," Griffiths remarked. "So what do you do? Reduce combustion-engine output and begin laying off employees. That is what will happen if we cannot find a solution."
Tesla, BMW, Mercedes-Benz, and several Chinese electric vehicle producers have challenged the new tariffs in Europe’s Court of Justice. However, these cases typically take about 18 months and can be appealed.
Seat's CEO stated that while they are not ruling out legal action, they also cannot afford to wait.
"Cupra is our game-changer — it is what has driven our profitability as a business," Griffiths explained. "If Cupra is at risk, then Seat is at risk."