Volvo shifts EV production to Belgium to avoid China tariffs

Volvo cars has started to shift production of Chinese-made electric vehicles to Belgium in the expectation that the European Union will drive ahead with a crackdown on Beijing-subsidized imports, according to a report in The Times.

Volvo, which is majority-owned by China’s Geely, was considering halting sales of Chinese-built EVs bound for Europe if tariffs were introduced, the newspaper said, citing company insiders.

However, the report added that shifting production of Volvo’s EX30 and EX90 models from China to Belgium is expected to negate the need for the company to do so and that the company insisted suspending sales of EVs made in China was no longer being considered.

The manufacturing of certain Volvo models bound for the United Kingdom could also be moved to Belgium, The Times said.

Volvo did not immediately respond to a Reuters request for comment outside of regular business hours.

The European Commission, which oversees trade policy in the 27-nation European Union, launched an investigation last year into whether fully-electric cars manufactured in China were receiving distortive subsidies and warranted extra tariffs.

The anti-subsidy investigation, officially launched on Oct. 4, can last up to 13 months. The Commission can impose provisional anti-subsidy duties nine months after the start of the probe.

Relations between China and the EU have been strained by factors including Beijing’s closer ties with Moscow after Russia’s invasion of Ukraine. The EU is seeking to reduce its reliance on the world’s second-largest economy, particularly for materials and products needed for its green transition.