Multinational automaker Stellantis has taken a smart step to circumvent the European Union’s hiked import tariffs on China-made electric vehicles: launch production on European soil.
The move comes before the major import tariff hike in Europe takes effect in just about two weeks.
Stellantis starts assembly of Leapmotor T03 in Poland
Stellantis and Leapmotor’s joint venture decided to kick off production of the affordable T03 electric hatchback at the giant conglomerate’s Tychy factory in Poland, Jefferies analysts reveal, citing Leapmotor’s management (via Reuters).
In a Sunday report, Jefferies disclosed Leapmotor management’s remarks at an analyst call that the initial units of its T03 had finally entered production at the Tychy factory last week.
The joint venture expects to start mass production in September 2024.
Jefferies further revealed that the JV aims to produce a second model at Stellantis’ Tychy factory. The model will be the Leapmotor A12 SUV, which will start production as early as Q1 2025.
The Chinese automaker has also kicked off the preparation for localized component production.
For context, production costs at Stellantis’ Polish factory are about €400- €500 ($428.08-$535.10) per car. This cost is similar to that of Leapmotor’s production base in China. In contrast, producing the same car at one of Stellantis’ Italy factories would cost double.
Leapmotor to face substantial tariff hike in the EU
Last week, the European Commission announced major price hikes of up to 38.1% on China-made electric vehicle imports. These changes will take effect in early July 2024.
In the case of Leapmotor, the import duty amounts to an extra 21% on top of the standard 10% rate.
Meanwhile, the rate will be 17.4% at BYD, 20% at Geely, and 38.1% at SAIC. All other Chinese players who agreed to cooperate in the investigation will face a 21% additional tariff, like Leapmotor.
Leapmotor International JV
Stellantis and Leapmotor formed the Leapmotor International joint venture, led by the multinational automaker with a 51% share.
As part of the deal, Leapmotor granted Stellantis exclusive rights to produce, export, and market its EVs beyond China.
The JV is under a wider alliance between the two automakers, with Stellantis buying a 21% stake in Leapmotor in a $1.6 billion deal.
The Leapmotor T03 cost roughly $21,000 in the European market last year. It also had access to state incentives. In Germany, T03 buyers can reserve a unit without a deposit fee. Deliveries will reportedly start by the end of 2024, with a base price of just about $24,000. In China, it costs about $11,000.
Stellantis’ move to relocate the TO3’s production from China to Poland will enable the model to avoid the additional 21% import tariff on top of the standard 10% rate in the European market.
