Mercedes CEO warns against tariffs for fair competition with China

In a recent address at the Shanghai Auto Show, Ola Kallenius, the CEO of Mercedes-Benz, expressed his concerns regarding the potential imposition of tariffs on Chinese electric vehicles (EVs) by the European Union. He highlighted the necessity for European automakers to engage in fair competition with their Chinese counterparts while emphasizing that tariffs would serve as a 'crude' method of achieving equity in the market. Kallenius, who also holds the role of President of the European automotive industry lobby group, ACEA, called for a more refined approach where the focus would be on fostering innovation through open market competition. Kallenius pointed out that history shows that economies nurtured in competitive environments tend to be the most innovative. He instead encouraged dialogue with both the EU and Chinese negotiators to seek solutions that would allow European manufacturers to compete directly with Chinese-made cars and SUVs without resorting to tariffs. This sentiment comes as the EU contemplates measures to address the influx of Chinese automotive brands into Europe, even suggesting alternatives like minimum pricing for Chinese EVs. The European automotive industry, particularly the German carmakers, has raised alarms over the introduction of tariffs, which could reach up to 45.3% on certain Chinese imports. They argue such measures could provoke retaliation from China, where a significant portion of German vehicles are sold. Kallenius stressed the importance of maintaining a balanced approach, deeming tariffs as the least sophisticated instrument in negotiations. In fact, he underscored the potential detrimental impact such tariffs could have on European manufacturers in the long term. In his speech, Kallenius also acknowledged the critical role that China plays for Mercedes-Benz and the wider automotive sector, referring to it as 'our most important market' and vital for technical innovations. With China accounted for a substantial amount of global EV production, Kallenius’s remarks illustrate the intricate balance needed as Western automakers navigate competition with well-established Chinese brands in an evolving automotive landscape.