Italy and Spain Court Chinese Carmakers to Get Around 45% Electric Vehicle Tariffs

Brussels is charging up to 45% on Chinese electric vehicles imported into the EU (EU Access2Markets). At the same time, Italy, Spain and Hungary are asking many of the same Chinese groups to build inside Europe instead. A tariff designed to shelter Europe’s car industry has become the starting gun for a contest between member states over Chinese factories, jobs and battery supply chains.

The Auction

Spain is well ahead in that contest. It has at least nine Chinese automotive plants at advanced stages, with combined investment of more than €15 billion. CATL’s €4.1 billion battery gigafactory in Zaragoza alone is expected to create 3,000-4,000 jobs (La Vanguardia). Hungary has already moved from courtship to production: BYD’s Szeged plant began trial production in January 2026, aiming for 150,000 vehicles a year, with plans to double that (electrive.com).

Italy shows the bind most clearly. Stellantis’s Cassino plant worked just 17 days out of 90 in Q1 2026, producing fewer than 3,000 cars. Italy made 380,000 vehicles in 2025, its lowest output since 1955. Industry Minister Adolfo Urso, who once tried to keep Chinese automakers out, is now making the opposite argument in public: "Two or three Chinese car companies are thinking about investing in Italy, and they are welcome". BYD has confirmed Italy is on its "short list".

The Tariff Loophole

The EU’s countervailing duties, extra charges meant to offset Chinese state subsidies, apply to cars made in China. BYD pays an additional 17%. SAIC pays 35.3%. But if the same car is assembled inside the EU from imported Chinese parts, the surcharge disappears. There is no EU-wide local content rule deciding what counts as "European-made" for tariff purposes. EV batteries, which account for 30-40% of a vehicle’s value, enter the EU at just 1.3% duty.

Chinese brands have worked through that opening quickly. They doubled their EU market share after the tariffs came in, partly by switching to plug-in hybrids, which are not covered by the duties. Exports of those vehicles rose +892% in one year. The Rhodium Group describes the core tactic as "minimal footprint" assembly inside the EU: enough activity to gain the European label, but not enough to deliver serious technology transfer.

Who Gains, Who Gets Squeezed

For parts of southern and central Europe, the calculation is plain enough. Empty factories get orders. Regions that have watched car production drain away get jobs. Spanish unions have welcomed Leapmotor as a "turning point" after years of uncertainty.

Germany is under pressure from several directions at once. The VDA, Germany’s auto industry association, expects 225,000 jobs to go by 2035, with 100,000 already lost since 2019. But the VDA itself does not blame Chinese competition as the main cause. It points instead to the EU’s 2035 CO2 fleet rules, which force the shift from combustion engines to electric and hydrogen powertrains (VDA, Handelsblatt).

Chinese factories in Spain do not, by themselves, kill those German jobs. The regulatory transition does much of that work. What Chinese competition adds is the collapse of a market German carmakers once treated as almost guaranteed. VW, BMW and Mercedes held just 1.6% of China’s EV market in Q1 2026, while VW’s operating profit from China fell to €83 million, down from a historic average of more than €500 million per quarter.

France wants the gap closed. Foreign Minister Barrot has warned EU colleagues that China is "dividing us: telling one, you'll get a factory here, telling another, you'll get market access there". Paris backs the Commission’s proposed Industrial Accelerator Act, which would require 70% EU-origin content for EVs receiving state subsidies. But that rule is not due until 2027-2028, and it would apply only to subsidised vehicles, not to tariff classification (chinaobservers.eu).

The next date that matters is May 21, when Stellantis chief executive Antonio Filosa presents the group’s new industrial plan. If Italy receives only marginal production allocation, Chinese investment stops looking like a fallback and starts looking like industrial policy. The EU’s new FDI screening regulation, expected by summer 2026, will for the first time cover greenfield investments as well as acquisitions. The difficulty for Brussels is that the factories are already being built.