EU tariffs threaten our future, says Cupra chief

An electric vehicle designed in Spain by Volkswagen's Cupra brand but made in China would be "wiped out" if the European Commission followed through with planned import tariffs of 21.3 percent, the brand's CEO said.

Raising the price of the Tavascan, an all-electric SUV selling for around 52,000 euros ($57,500), to cover the cost was not an option in the current European economic environment, said Wayne Griffiths, who heads up the Seat and Cupra brands under the Volkswagen subsidiary.

Nor was moving production to another location after the company had invested in building up capacity at Volkswagen Anhui, a majority-owned joint venture with China's JAC Group.

Without the projected Tavascan sales, Cupra would miss EU-mandated carbon dioxide reduction targets in 2025 and so face heavy fines, forcing it to cut output with a possible effect on employment at its base in Spain, Griffiths said.

"It puts the whole financial future of the company at risk," Griffiths said, speaking from Barcelona. "The intention was to protect the European car industry but for us, it's having the opposite effect … We need to find a solution."

The comments are the strongest yet by a carmaker affected by the tariffs, highlighting worries Brussels will hurt the domestic players it is trying to protect via its probe of Chinese subsidies launched almost a year ago.

The anti-subsidy tariffs are on top of the EU's standard 10 percent duty on car imports, a measure the commission says is aimed at leveling the playing field and countering what it says are unfair subsidies.

The Tavascan, like BMW's electric MINI, was initially hit with a 38.1 percent tariff in Brussels' plans, prompting protests from both companies.

The tariff on both cars was reduced to 21.3 percent in August to be included in the list of companies that cooperated with the EU probe.

At the same time, Brussels lowered the proposed duty for Tesla, which has a big factory in Shanghai, to 9 percent, the lowest of all duties, after the US EV maker negotiated for a better rate.

If duties are imposed, Cupra can request its own negotiated duty, as Tesla has. The review would last up to nine months.

Griffiths said Cupra was in talks with "different levels" of the commission and the German and Spanish governments to try to convince them to cut or scrap the planned duties.

German carmakers like 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 China are made locally, many top-end models are imported.

Cupra decided several years ago to produce the Tavascan, its second all-electric model, at Volkswagen's newly constructed Anhui plant in China as a "one-off" to get the product to market quickly. It has always planned for the model's successor to be built in Europe, Griffiths said.

"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," he said. "We're a different animal. That's what we're trying to explain."

Reuters