Volvo Shifts Production of Chinese-Made Electric Vehicles to Belgium Amid EU Trade Policy Concerns

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Volvo Cars has commenced the relocation of its production of Chinese-made electric vehicles (EVs) to Belgium, anticipating the European Union’s potential crackdown on Beijing-subsidized imports, according to a report by The Times on Saturday. This strategic shift comes as the EU intensifies scrutiny over subsidies provided by China for its fully-electric vehicles.

Volvo, which is majority-owned by China’s Geely, is reportedly planning to halt sales of Chinese-built EVs destined for Europe should the EU introduce new tariffs. The move to shift production of the EX30 and EX90 models from China to Belgium aims to mitigate the impact of potential tariffs. Company insiders have indicated that this relocation could help Volvo avoid suspending sales of its Chinese-made EVs in Europe.

The Times report also suggests that production for Volvo models intended for the UK market might also be relocated to Belgium. This proactive measure underscores Volvo’s commitment to maintaining its market presence in Europe amidst regulatory uncertainties.

Volvo has not yet commented on this development, according to Reuters, as the company has not responded outside of regular business hours.

The European Commission, which governs trade policy within the 27-member EU, launched an investigation in October last year to determine if Chinese-manufactured fully-electric cars are benefiting from unfair subsidies. This investigation, which can last up to 13 months, might lead to the imposition of provisional anti-subsidy duties as early as nine months into the probe.

The investigation is part of a broader EU strategy to reduce dependency on China, especially for materials and products essential for its green transition. EU-China relations have been strained by Beijing’s closer ties with Moscow following Russia’s invasion of Ukraine. The EU’s focus is increasingly on securing its supply chains and fostering a more resilient green economy.

Volvo’s decision to relocate its EV production from China to Belgium highlights the company’s strategic foresight in navigating potential trade barriers and maintaining its competitive edge in the European market. As the EU continues its investigation, Volvo’s proactive measures might set a precedent for other automakers facing similar geopolitical and regulatory challenges.