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Mercedes-Benz CEO voices 'contrarian' opinion on Chinese auto tariffs

2024-03-15 11:05:20

Mercedes-Benz CEO voices 'contrarian' opinion on Chinese auto tariffs

The idea of Chinese automakers sharing the same space with Western car manufactures in major markets like the United States and Europe has triggered a lot of anxiety in both automotive figureheads and lawmakers.

Despite stern warnings by auto CEOs like Elon Musk about Chinese automakers and stateside politicians issuing their own legislative defenses, the CEO of a luxury household name is presenting a differing opinion from left-field.

In an recent interview with the Financial Times, Mercedes-Benz (DDAIF) CEO Ola Källenius expressed that he believes that the European Commission should do the opposite of what everyone else is thinking about and lower tariffs on EV's imported from China.

He proposes that the EU Commission should lower - not raise - tariffs on Chinese-made cars, as he believes that the devastating amount of competition such cars will bring will force his European automaker contemporaries to make and sell higher quality cars.

“Don’t raise tariffs,” Källenius told FT. “I’m a contrarian, I think go the other way around: take the tariffs that we have and reduce them … that is the market economy. Let competition play out.”

China and the EU are at odds with each other when it comes to tariffs on each other's cars in their respective territories. Currently as it stands, cars made by Chinese automakers face a 10% tariff when they are offloaded on European docks, while cars made by European marques pay a 15% tariff when their wares reach the shores of China.

Though many automakers that dominate the European market like Stellantis (STLA) and Renault (RNSDF) have warned about it's Chinese competition, Mercedes remains in its stance.

“We as companies are not asking for protection, and I believe the best Chinese companies are not asking for protection,” he said. “They want to compete in the world like everybody else. It has been opening up markets that has led to wealth growth, especially in the economic wonder of China, that has lifted hundreds of millions of people out of poverty. If we believe protectionism is the thing that gives us long-term success, I believe history tells us that is not the case.”

Does the Chinese market play a role in Mercedes CEO's statements?

It should be noted that this stance on proposed European Commission rulings may come from a place of fear of retaliation.

According to the Mercedes-Benz Group's full year report for 2023, a large chunk of its sales came from the Chinese market. Of the 2,044,051 cars Mercedes sold worldwide throughout 2023, the United States bought 298,013 of them, while the Chinese have bought 737,226 - about a third of its worldwide figures.

It should also be said that 590,590 of the 737,226 Mercedes cars sold in China were produced in China, where a local factory established under a joint venture with state-owned entity BAIC produces popular models like the popular C-Class and E-Class sedans.

“We live in a pragmatic world and realize there are some expectations to the general market economy rule," the Mercedes CEO said. "But if we seek our fortune in increased protectionism, we are going the wrong way.”