Auto File-De-escalation, re-escalation, and who's the true 'tariff king'?

April 8 -

By Victoria Waldersee, Reuters Germany Autos Correspondent

Greetings from Berlin, where I’m standing in for Nick to bring you the headlines from the auto world as he takes a well-deserved one-week break.

I can only hope that signal is patchy at his chosen holiday spot and he can get some reprieve from the rollercoaster of trade war escalation and attempted de-escalation that is jolting markets and leaving everyone from consumers to companies scrambling to understand what it all means for them.

U.S. car sales were up 4.8% in the first quarter as customers rushed purchasing decisions before cars become significantly pricier. Some brands, like Jaguar Land Rover and Audi, are pausing some imports into the United States as they figure out what to do. Carmakers have, on average, 48 days of supply in their dealer lots, giving them some breathing room to decide on a long-term strategy… but not much.

There is no quick fix. Negotiations among trade officials are still ongoing, with China vowing to “fight to the end” while the EU opts for a more conciliatory approach of calling to lower tariffs on both sides to zero, a suggestion Trump has flatly rejected.

Which brings us to today’s Auto File…

Today

• EU asks India for tariff relief

• BYD launches premium brand in Europe

• Carmakers fined for vehicle recycling cartel

EU begs for mercy from the other ‘tariff king’

You know your tariffs are high when even President Donald Trump is calling you “tariff king.” Such is the way for India, which has an exceptionally steep tariff of over 100% on car imports as it aims to protect local carmakers building up its auto sector, particularly in EVs.

But the issue is causing tension as Prime Minister Narendra Modi tries to conclude trade deals with western powers, from the EU to the United States.

Sources told our colleagues in India last week that the government plans to significantly reduce import tariffs on electric cars to get a trade deal with Trump over the line, despite protest from local players.

Now, the EU has piped up and said it wants the tariff to come down to just 10%, sources told Aditi Shah and Shivangi Acharya this week, a deal which Modi just may acquiesce to so that he can finally sign the dotted line on a trade deal the two parties have been negotiating for years.

Foreign carmakers will cheer if the deal goes through, but domestic players like Tata and Mahindra & Mahindra say the move would undermine their efforts to bolster local manufacturing by making imports cheaper, particularly for EVs, a small but fast-growing sector.

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BYD goes upmarket

China’s EV giant BYD is on a mission to win market share in Europe. After a rocky start last year, particularly in Germany where marketing missteps and a lack of local know-how stymied sales, the carmaker is hitting back hard in 2025, with two plants under construction in the region and a third potentially on the horizon.

BYD, which sold over 4.2 million vehicles last year, is perhaps best known for managing to bring down the cost of EVs featuring autonomous driving tech (humbly named ‘God’s Eye’) to below $10,000 in China - but it’s also producing cars on the upper end of the price spectrum.

This week, it launched its premium Denza brand in Milan, which will sell cars made in China at a price point above 72,000 euros, starting with an EV version of its Z9 GT sport wagon later this year.

The move aligns with recent comments by BYD chairman Wang Chuanfu that he hopes overseas sales will boost profitability, as it fights to survive a brutal price war back in China.

More fines, more problems

Auto industry investors already despairing over how their companies will fare under tariff costs won’t have loved this piece of news: Volkswagen, Stellantis, and 13 other carmakers were fined a total of 458 million euros by EU antitrust regulators for taking part in a vehicle recycling cartel.

According to the EU Commission, the guilty companies (all the carmakers admitted to wrongdoing in return for a 10% cut in fines) had a covert agreement to keep quiet how much of their new cars were made of recycled materials and not compete with each other in advertising to what extent their cars could be recycled, with autos association ACEA organizing meetings and contacts between the companies.

Mercedes-Benz got out of paying a fine in exchange for alerting the EU enforcer to the cartel.

Fast Laps

CATL is in talks to buy a controlling stake in EV maker Nio’s power unit, four sources told Reuters . CATL, the world’s largest battery maker is ramping up investments in battery swapping facilities, a novel approach to EV batteries adopted by Nio and a handful of other players where customers can replace their car’s depleted battery pack with a fully charged one in under three minutes.

China restricted its exports of rare earths, a group of 17 elements critical to the defense, electric vehicle, energy and electronics industries. The move is part of the country’s response to Trump’s tariffs but will affect the world, with China controlling 90% of global supply.

Porsche deliveries tanked in China in the first quarter of 2025, in a sign that the problems which plagued foreign automakers in the country all of last year show no signs of abating, with competition fiercer than ever and consumers reluctant to make big purchases amid an uncertain economy.