Global automakers navigate reshoring, China

The May 22 X thread by Theanonprime2 described a problem now visible in company filings, trade policy and factory plans across the auto industry: global carmakers are trying to localize production in the United States, comply with tougher European rules and still rely on China for technology, batteries or market access. That combination is not theoretical. Toyota has started battery production in North Carolina, Volkswagen has expanded its technology work with XPENG in China, and BYD is building out manufacturing capacity in Hungary. The policy backdrop has hardened since 2024. The White House said in May 2024 that it would raise Section 301 tariffs on Chinese electric vehicles to 100%, while the European Commission said definitive countervailing duties on battery-electric vehicles from China took effect on Oct. 30, 2024. The Commission followed that with an automotive action plan published on March 5, 2025, aimed at competitiveness, supply chains and the transition to zero-emission mobility. (pressroom.toyota.com) ### Why are automakers reshoring in the United States? Toyota said on Nov. 12, 2025 that it started production at its battery plant in Liberty, North Carolina, a nearly $14 billion facility expected to create up to 5,100 jobs. The company called it its first and only battery plant outside Japan and its 11th U.S. plant. U.S. tariff policy has added to the incentive to build closer to the market. (bidenwhitehouse.archives.gov) The Biden White House said Chinese EV tariffs would rise to 100%, and the measures also covered parts of the EV supply chain including batteries, battery parts and critical minerals. For automakers selling in the United States, that makes local assembly and regional sourcing more important than before. (pressroom.toyota.com) ### Why does Europe complicate the picture? The European Commission said its duties on Chinese battery-electric vehicle imports were adopted under Implementing Regulation (EU) 2024/2754 after concluding that China’s BEV value chain benefited from unfair subsidies. That means automakers with China-made models for Europe face an added cost even when the brand itself is European. (bidenwhitehouse.archives.gov) Volkswagen became one example of that tension. Reuters reported in February that Volkswagen secured a tariff reprieve for its China-made Cupra Tavascan SUV, and other Chinese automakers were expected to pursue similar arrangements with Brussels. That showed how trade barriers in Europe can collide with production footprints built around China. (trade.ec.europa.eu) ### Why are companies still partnering with China? Volkswagen said its partnership with XPENG is part of its “In China, for China” strategy, and the companies signed a master agreement on platform and software collaboration in 2024. Volkswagen Group China said in August 2025 that starting in 2027 the Volkswagen brand would introduce the China Electronic Architecture, developed with XPENG, into locally produced vehicles with conventional and hybrid powertrains. (money.usnews.com) XPENG said on March 2, 2026 that global delivery of its VLA 2.0 intelligent driving system is set to begin in 2027, with Volkswagen named as the first launch partner for the technology in the Chinese market. That underscores why some foreign automakers still need Chinese partners even as trade tensions rise: the partnerships are tied not only to manufacturing but also to software and vehicle electronics. (volkswagen-group.com) ### Where does BYD fit in? BYD said in December 2023 that it would build a passenger-car factory in Szeged, Hungary, calling it the first BYD passenger-car factory in Europe. The company said the plant would support localized production in Europe and create thousands of jobs. By February 2026, trade publication Electrive reported that BYD had begun trial production in Hungary, with full-scale series production expected in the second quarter. (xpeng.com) That is the same localization play Western automakers have pursued elsewhere: produce inside the market to reduce tariff exposure, shorten logistics chains and align with local policy demands. (byd.com) ### So what does the three-track strategy look like in practice? The common pattern is visible across regions. In the United States, Toyota is adding battery capacity. In Europe, automakers are adjusting to tariffs and industrial policy. In China, Volkswagen is deepening a technology partnership rather than retreating. The next milestones are already dated. BYD’s Hungary plant is expected to move from trial production to series production in the second quarter of 2026, and Volkswagen has said broader use of its China Electronic Architecture with XPENG is scheduled to begin in 2027. (electrive.com) (pressroom.toyota.com)