Volkswagen's Spanish subsidiary SEAT will be forced to reduce production and layoff approximately 1,500 workers in Spain if the European Union does not reduce its tariff on the brand's China-made EV by the end of March, the company’s CEO Wayne Griffiths has told Reuters.
The company, which produces vehicles under the SEAT and Cupra brands, has been hit with an additional 20.7% charge on its Cupra Tavascan.
These vehicles are manufactured at Volkswagen Group's majority-owned facility in Anhui, China.
Since October, the EU's imposition of tariffs on all China-made EVs sold in Europe has led to SEAT paying an extra 20.7% on top of the pre-existing 10% common external tariff (CET) that applies to passenger cars.
Griffiths told the publication that the charge is levied on a car selling at around €50,000-60,000. This caused the subsidiary to miss its financial targets last year.
He expressed that the subsidiary will face hundreds of millions of euros in costs by 2025 if the situation persists.
Griffiths said: "We don't have much time. We need to get to a solution within the first quarter.”
SEAT and Volkswagen Group executives have been in ongoing discussions with EU officials regarding the Tavascan's situation.
SEAT spokesperson was cited by the news agency as saying that Spain's Prime Minister Pedro Sanchez has also intervened, requesting assistance from Commission President Ursula von der Leyen to resolve the issue and prevent job losses.
Griffiths emphasised the need for tariff level to be "as close as possible" to the initial 10%.
Without a reduction or removal of the additional tariff in the first quarter, Seat may have to discontinue the loss-making Tavascan, which would also complicate the company's efforts to meet EU emissions targets.
The Volkswagen Group has chosen not to join a carbon credit pool, instead hoping to meet emissions targets through EV sales.
SEAT CEO has not ruled out the possibility of legal action. He acknowledged that the company cannot “afford” to wait for a resolution through the courts.
Griffiths said: “Cupra is our game-changer - it's what made us profitable as a company. If CUPRA is at risk, SEAT is at risk.”
Meanwhile, Tesla, BMW, Mercedes-Benz, and several Chinese EV manufacturers have legally challenged the new tariffs in Europe's Court of Justice.
