Geely won’t build new factories in Europe and the U.S.

The Chinese Geely Holding does not intend to join the race for the best production sites in Europe and the US. Amid subsidy criteria and ongoing global tariff conflicts, localised production in Europe and the US has become an increasingly relevant topic for Chinese carmakers. Still, Geely doesn’t want to get involved in this.

At an internal meeting, Eric Li, also known as Li Shufu, founder and CEO of Geely Holding, reportedly emphasized that the group has no intention of building factories in Europe or the U.S. A video recording of the meeting has been published by Geely itself. Shufu cited the stagnation of globalisation in the automotive industry and an oversupply of production capacity worldwide as key reasons.

Eric Li, also known as Li Shufu, is the founder of Geely

Other possibilities

Unlike manufacturers such as BYD, which still intends to establish European production facilities, Geely already has one advantage. Through its subsidiary Volvo, Geely operates car factories in Europe and the United States.

Volvo has plants in Gothenburg, Sweden, and in Ghent, Belgium. It also has a plant in the United States, specifically in South Carolina. However, additional US-based factories from Chinese carmakers appear unlikely in the current political climate, as Chinese OEMs are largely excluded from the American market. Other manufacturers have invested in facilities in Mexico for the North American region, but Geely does not appear to be prioritising this either.

Additionally, the Renault Group, with its numerous facilities, is a strategic partner of Geely Holding. Shufu wants to build on and expand this existing collaboration first. With Renault, for instance, he mentioned South Korea as a potential market for joint production, which is already underway, as Renault Korea Motors, Renault’s Korean subsidiary, currently manufactures the Polestar 4 on behalf of Geely.

Global overcapacity

Geely’s CEO steered clear of political commentary and instead based the group’s strategic decision primarily on the current global overcapacity. “We should avoid building production facilities, that is, purchasing land, constructing plants, acquiring equipment, and hiring staff,” said Li Shufu. “Given the global overcapacity in vehicle production, this is not the optimal approach.”

Li Shufu also sees merit in cooperating with Western manufacturers in other markets, such as Southeast Asia, beyond Europe. In that region, and particularly in Malaysia, localisation of components and skilled labour must be accelerated, he stated.

International business is currently harmed, above all, by tariffs and the trade dispute between the U.S. and China. EVs built in China can now only be sold in the EU with an added customs duty, which has prompted other Chinese manufacturers to consider or begin building European facilities.

Tariff war

Meanwhile, U.S. President Donald Trump announced on Friday that he is recommending a 50% tariff on goods from the European Union, effective June 1, stating that the EU has been difficult to deal with on trade. Volvo CEO Samuelsson told Reuters that a 50% tariff would limit the ability of Volvo Cars to sell its Belgium-made EX30 electric vehicle in the United States. “That would, of course, be almost impossible,” he said.

Trump’s tariffs on automotive imports and car components have caused turmoil in the global automotive industry, with some companies adjusting their production plans to mitigate the costs associated with the duties. At the same time, others await the outcome of the policies.

Samuelsson said he was hopeful that Europe and the United States would soon reach an agreement, despite the threat of rising tariffs.
“I believe there will be a deal soon. It could not be in the interest of Europe or the U.S. to shut down trade between them.”
To avoid European import tariffs, Volvo now also builds its EX30 best-seller in Ghent. The threat of U.S. President Trump for 50% tariffs would make it impossible to sell it in the U.S. when made in Europe /Volvo

 

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