TMTPost -- Chinese electric vehicle (EV) manufacturers seemingly rush to resort localization in manufacturing to help mitigate risks of escalating EV tariff dispute between China and the European Union.

Credit：Nio

Chinese EV maker Nio Inc. is preparing a takeover bid for Audi’s car plant in Brussels, which is facing possible closure, Belgian newspapaer De Tijd reported. Audi parent Volkswagen Group said in July it was considering closing the Brussels site due to low demand for the Q8 E-Tron, the plant's only model.

Nio declined to comment on the report. If the company did emerge as a potential buyer and wins the bid, it can transfer some of EV production in Brussles and the move is accordingly helpfuly for it to avoid elevated tariffs on Chinese-made EVs imposed by the EU.    

The European Commission disclosed last month its draft decision to impose definitive countervailing duties on imports of BEVs from China to interested parties.The Commission said it would make a slight adjustment of the proposed duty rates based on substantiated comments on the provisional measures, though it still believes Chinese EV production has been benefited from subsidies. The regulatory body proposed to add up to 36.7% to the current 10% duty faced by Chinese exporters, modestly lowered from the initial maximum planned duty of 37.6% set in the start of July. 

The EU remains open to reaching an effective solution with the Chinese authorities in a World Trade Organization (WTO)-compatible manner, the European Commission said. According to the executive arm of the EU, EV companies subjected to proposed tariffs have ten days until August 30 to provide comments and request hearings. If a qualified EU majority votes in favor of the final regulation, the tariffs could become law by October 30 and remain in effect for five years, with the option extensions upon review.

As the EU is hiking duties on Chinese EVs to as much as 48%, China's new generation of EV manufacturers is teaming up with local industry so as to make their cars are considered homegrown. Barcelona will  play host to the Omoda E5, made by China's Chery Automobile, which has partnered with Spain's Ebro-EV Motors. Chinese maker Leapmotor's T03 city cars are rolling off an assembly line a Stellantis plant in Tychy, Poland. China's No. 1 EV maker BYD has announced plans for its own factory in Hungary, with another on the horizon in Turkey. Zeekr plans to use existing production facilities in Europe owned by its parent Geely and is considering building its vehicles in Europe to avoid EU duties.

But Valdis Dombrovskis, an executive vice president of the European Commission, warned recently that such moves would only work if the firms meet rules-of-origin requirements that dictate a minimum level of value must be created in the EU. “How much of the value added is going to be created in the EU, how much of the know-how is going to be in the EU? Is it just an assembly plant or a car manufacturing plant? It’s quite a substantial difference,” Dombrovskis told the Financial Times last month.

Volvo Car parent Zhejiang Geely Holding Group and its domestic peer Xpeng Inc. these day are working to build cars in Europe to help offset tariff hit. Xpeng is in the initial stages of selecting a site in the European Union as part of its future plan to localize production, CEO He Xiaopeng said in an interview with Bloomberg. He said his company expects to build capacity in areas with “relatively low labor risks.”

Geely executives recently said the Chinese automaker is scouting locations for a plant in Europe. "It is not 100 percent yet," Li Chuanhai, vice president of Geely Auto Group replied to a question about whether the company would build a plant in the region. "We have a lot of possibilities," Li said when asked about the ongoing talks between Geely and Poland’s government over a joint EV venture in the country, declining to offer more details.