The CEO of Mercedes-Benz, Ola Källenius, has urged the European Union to take a more cooperative approach towards Chinese electric vehicle (EV) manufacturers, encouraging them to open production facilities in Europe rather than imposing punitive tariffs. In an interview with the Financial Times, Källenius argued that such a strategy could resolve escalating trade tensions while fostering competition and innovation.
Källenius, who also serves as president of the European Automobile Manufacturers’ Association (Acea), highlighted that the EU should avoid accelerating protectionist policies, warning that doing so could have significant economic repercussions. “Nobody disagrees about the fact that the level playing field is a legitimate discussion. The question is, what tool do you use?” he remarked. “Don’t accelerate protectionism because we have much to lose.”
In October, Brussels imposed tariffs of up to 45% on imported Chinese EVs, citing allegations of unfair subsidies. This decision triggered retaliatory actions from Beijing, including anti-dumping tariffs on European brandy and investigations into EU pork and dairy products.
German carmakers, including Mercedes-Benz, Volkswagen, and BMW, have been particularly vocal in opposing protectionist measures. These companies fear that such policies could provoke further retaliation from China, a critical market that accounts for roughly 30% of Mercedes-Benz’s global sales. The rise of competitive and affordable Chinese EV brands, such as BYD, has already led to a significant decline in sales for German manufacturers.
Drawing on historical parallels, Källenius suggested that the EU could adopt a reciprocal approach similar to the one China took in the 1980s when German automakers were required to form joint ventures with Chinese partners to gain access to the market. “When we came to China, there was a call upon us by the policymakers: industrialise here if you want to capture the market. From my understanding, European policymakers have said the same vis-à-vis the Chinese,” he noted.
The EU is reportedly considering requiring Chinese manufacturers to establish factories in Europe and share technological know-how to gain market access. Some Chinese companies, such as BYD, have already begun to invest in Europe, with plans to build vehicles in Hungary. Similarly, CATL recently agreed to a €4.1 billion deal to construct a lithium battery factory in Spain in partnership with Stellantis.
Källenius cautioned that tariffs could harm the global automotive industry, particularly as China plays a crucial role in the supply chain for raw materials, advanced chips, and components. He stressed the importance of maintaining open markets, saying, “We just want to caution policymakers to say, don’t forget what made us so successful in this complicated world.”
The call for a cooperative approach comes at a time when global trade relations face increasing strain. Acea, under Källenius’s leadership, has also urged EU leaders to avoid retaliation against other trade barriers, such as those proposed by U.S. president-elect Donald Trump.
Mercedes-Benz remains one of Germany’s leading automakers, alongside Volkswagen and BMW, with significant investments in both China and the U.S. Chinese entities, including Geely and state-controlled BAIC, currently own a fifth of Mercedes-Benz’s shares, further underscoring the company’s dependence on the Chinese market.
