Volkswagen's Cupra Brand Facing 'Wipe Out' by EU Tariffs

Volkswagen’s production strategy of building battery-electric vehicles in China under joint ventures for imports to Europe could spell disaster for its Spanish sub-brand, Cupra.

The brand, a performance-car spin-off of Volkswagen’s SEAT mass-market badge, initially built its Tavascan electric SUV at its parent company’s Anhui plant, a majority-owned joint venture with China's JAC Automobile Group.

Despite moving production to a different location since, the model will still be hit by a 21.3% tariff on top of the standard 10% third-country tariff when imported to European Union markets. This means the compact SUV will have to sell for about €52,000 ($57,500), far beyond the means of most of its target C-segment audience.

Now Wayne Griffiths, CEO of Cupra and parent SEAT brand, tells Reuters the effects of the punitive tariffs could see the brand “wiped out.”

That’s because the Chinese-built Tavascan is the company’s only BEV on the market while the rest comprise performance-focused internal-combustion-powered vehicles and hybrids like the only just unveiled Terramar, offering turbocharged gasoline, mild-hybrid and plug-in hybrid powertrain options delivering power outputs from 148 hp to 268 hp.

Without the projected BEV sales, Cupra would miss EU-mandated zero-tailpipe-emission product targets next year and so face heavy fines, forcing it to cut output with a possible impact on employment at its base in Spain, Griffiths says.

Speaking from Barcelona, he tells Reuters: “It puts the whole financial future of the company at risk. The intention [of tariffs] was to protect the European car industry but, for us, it's having the opposite effect...We need to find a solution.

“We're not a Chinese brand trying to swamp the European market. Our cars are not for the masses. The car is not a subsidized product. We're a different animal. That's what we're trying to explain.”