Volkswagen’s electric vehicle brand, Cupra, is facing a critical threat from proposed European Union tariffs on imports from China. The 21.3% tariff, introduced as part of the EU’s strategy to protect its car industry, could severely undermine the Cupra brand, which is a subsidiary of Volkswagen. According to Wayne Griffiths, CEO of both Seat and Cupra, the proposed tariffs could result in significant financial losses for the company, potentially wiping out its all-electric models.
Cupra’s all-electric SUV, the Tavascan, designed in Spain but manufactured in China, is priced at around €52,000 (£43,800). Griffiths has stressed that increasing the price of this model to cover the additional costs imposed by the tariffs is simply not feasible in today’s highly competitive European market. Any price hike could make the car unaffordable to its target customers, severely affecting sales.
The Tavascan, already in production at Volkswagen’s Anhui plant in China, is a key part of the company’s strategy to meet EU carbon dioxide reduction targets. Without sufficient sales of this model, Cupra risks failing to meet those targets, which could result in hefty fines. In addition, it could lead to reduced output at Cupra’s base in Spain, potentially affecting jobs and disrupting the company’s European operations.
Griffiths pointed out that the company has heavily invested in its Chinese production facilities and moving production elsewhere is not a realistic option. “This situation threatens the entire financial stability of Cupra,” he said, speaking from Barcelona. “The goal of these tariffs was to protect European carmakers, but in our case, it’s doing the opposite.”
Despite being produced in China, Cupra does not consider itself part of the Chinese automotive influx into Europe. “We’re not a Chinese brand flooding the European market. Our cars are premium, not mass-produced, and certainly not subsidised. We’re a different kind of company,” Griffiths added.
The issue arises as Volkswagen faces increased competition from lower-cost Chinese electric vehicle manufacturers setting up EU factories. The new tariffs, designed to level the playing field, come on top of the standard 10% duty already applied to car imports. While the Cupra Tavascan was initially subject to a 38.1% tariff, protests from both Cupra and BMW (for its electric Mini) resulted in a reduction to 21.3%.
While Tesla’s negotiations with Brussels resulted in a much lower 9% tariff on its imports, Cupra has not yet been able to negotiate a similarly favourable outcome. However, Griffiths indicated that Cupra would seek to renegotiate the tariff, a process that could take up to nine months.
German carmakers, including Volkswagen, are particularly vulnerable to any further counter-tariffs imposed by China. China accounts for a substantial portion of their global sales, and while many models sold there are manufactured locally, top-end vehicles are often imported, leaving companies like Volkswagen exposed.
