KUPPENHEIM, Germany (Reuters)

German automakers should not fear competition from China, Chancellor Olaf Scholz stated during the opening of Mercedes-Benz's first battery recycling plant. He termed this investment a part of Germany's new industrial policy agenda.

> "Some say that China can do much better with electric motors than us," Scholz remarked.

He reassured that German companies need not be concerned about this rivalry, recalling that the industry has previously faced significant competition from South Korea and Japan. He reiterated Germany's opposition to the EU's tariffs on Chinese-made electric vehicles (EVs).

> "I'm against tariffs that harm us," Scholz emphasized at the opening ceremony in Kuppenheim, south-western Germany.

Scholz argued that the EU should impose tariffs only where dumping and subsidies genuinely disadvantage European producers, citing the steel industry as an example.

The European automotive sector is currently grappling with multiple challenges, including high production costs, the transition to electric vehicles, declining demand, and increasing competition. As a result, some European automakers are reducing production capacity, and Volkswagen is contemplating its first-ever plant closures in Germany.

Joerg Burzer, a Mercedes board member responsible for production, noted that nearly all Mercedes factories are operating at full capacity, except one in Sindelfingen, which produces the high-end S-Class model line.

Mercedes experienced a 13% drop in third-quarter sales in China—where the company generates about a third of its sales—largely due to reduced luxury demand stemming from the country's real estate crisis.

The EU has imposed significant tariffs on Chinese-made electric vehicles, claiming they benefit from unfair state subsidies, a claim Beijing refutes. China has threatened retaliation, while German automakers, reliant on Chinese profits, have called for more dialogue. Germany has voted against the tariffs.

Mercedes aims to extract raw materials such as lithium, nickel, and cobalt from used electric car batteries at its carbon-emissions-free factory for reuse.