BERLIN, Feb 7 (Reuters) - SEAT, Volkswagen's Spanish subsidiary, may have to reduce production and cut approximately 1,500 jobs if the EU does not lower the tariff on its China-made electric car by the end of March, the CEO informed Reuters.
Since October, when the European Union imposed additional tariffs on all Chinese-made electric vehicles (EVs) sold in Europe, SEAT S.A., which manufactures cars under the SEAT and CUPRA brands, is facing an extra 20.7% charge on top of the existing 10% tariff on its CUPRA Tavascan, produced at a VW Group facility in Anhui, China.
Executives from various European car manufacturers have voiced concerns that the added tariffs on their Chinese-made vehicles are negatively impacting local companies and employment, going against the intended purpose of the policy.
SEAT CEO Wayne Griffiths mentioned that the imposed charge, affecting a car priced around 50,000-60,000 euros, resulted in the company missing its financial goals last year and is projected to cost hundreds of millions of euros by 2025 unless resolved promptly.
"We don't have much time. We need to reach a resolution within the first quarter," Griffiths expressed in an interview with Reuters.
While SEAT and VW Group executives have been engaging in frequent discussions with EU officials regarding the Tavascan's situation, Spain's Prime Minister Pedro Sanchez has also sought intervention from Commission President Ursula von der Leyen to resolve the matter and prevent substantial job losses, a SEAT spokesperson noted.
Griffiths refrained from specifying the acceptable level of tariff for the company but stressed the importance of it being "as close as possible" to the original 10%.
If the additional tariff remains unchanged in the first quarter, SEAT will have no choice but to discontinue the unprofitable vehicle from its lineup, Griffiths disclosed.
This decision would bring a new challenge for the company: achieving the required average fleet emissions without the Tavascan.
SEAT is considering options like purchasing carbon credits from EV manufacturers, also known as "pooling," or reducing the production of traditional combustion engine cars to lower their average emissions.
SEAT CEO emphasized the urgency of the situation, acknowledging potential legal action but underscoring the critical need for a swift resolution.
"If CUPRA is at risk, SEAT is at risk," Griffiths emphasized, highlighting the importance of this particular vehicle for the company's profitability and future prospects.