PARIS (Reuters) - The EU's duties on Chinese-made electric cars will speed up plant closures in Europe by local automakers, as tariffs will push Chinese manufacturers to build facilities in Europe, adding to overcapacity problems, Stellantis (NYSE:STLA)' CEO said on Monday.
European governments, including Italy, are trying to attract Asian automakers as the companies step up their commercial presence in the region.
Manufacturing cars in Europe would allow them, under certain conditions, to avoid duties on EVs being introduced by the European Union.
Tariffs are a "good communication tool" but have side effects, Stellantis CEO Carlos Tavares said at the Paris Car Show.
"It increases the overcapacity of the manufacturing system of Europe. The way to avoid custom duties is to build in Europe," he added. "You are accelerating the need to shut down plants".
Speaking to Italian media, Tavares mentioned the case of Chinese EV giant BYD (SZ:002594), which is building its first European assembly plant in Hungary.
"Chinese carmakers will not go to Germany or France or Italy to build their cars, because they would have cost disadvantages there, starting from energy costs," he said.
Rome, which is at odds with Stellantis over its declining output in Italy, has said it is in talks with Asian automakers over possible manufacturing investments, including with China's Dongfeng and Chery Auto.