MUNICH, May 23 (Reuters) - Europe's car giants won't

have much time to restructure their operations and product lines

to compete with ascendant Chinese automakers, and stiffer

tariffs will do little to protect the status quo, industry

executives said during a Reuters event.

European trade regulators in Brussels have said they could

levy new tariffs on Chinese electric vehicles based on the

results of an investigation into Chinese government subsidies.

European Commission President Ursula von der Leyen on

Tuesday said that Europe would take a "tailored approach" to its

investigation and any potential duties imposed will be

"correspondent to the level of damage". It will inform those

Chinese EV makers incurring provisional tariffs by June 5.

But industry executives said that Brussels cannot prevent

the reckoning that China's lower cost EVs will force on European

automakers and their traditional suppliers.

Chinese carmakers, which command a 30% or more cost edge

over European rivals, took 19% of Europe's EV market last year,

up from 16% in 2022, according to the Rhodium Group.

"And the window is closing. From my point of view, we have

two or three years. If we are not fast...it will be really tough

(for German industry) to survive," Thomas Schmall, a board

member at Europe's top carmaker Volkswagen, said at

the Reuters Events Automotive conference in Munich.

"Today, it is no longer size that guarantees survival, but

speed," he told Reuters.

Stellantis ( STLA ) CEO Carlos Tavares said carmakers

"don't have much time" to adjust their businesses and depended

on the removal of "regulatory chaos and the bureaucracies that

we have in our backyard".

The surge in Chinese exports, and the prospect of Chinese

factories within Europe, are forcing the continent's incumbent

automakers to explore partnerships with long-time rivals, turn

up pressure on suppliers to cut costs, and intensify discussions

with European unions over the future of plants and jobs,

executives said.

Some of these tactics are stumbling out of the gate.

Renault and VW last week pulled the plug on talks

to develop lower-cost EVs over disagreements about where to make

the car.

Europe's automakers are dealing with "a form of competitive

asymmetry" not only with China but with U.S. clean vehicle

subsidies, Renault CEO Luca de Meo told Reuters on the sidelines

of the VivaTech summit in Paris. "In the end, the best thing you

can do is be competitive."

Underscoring the scale of China's ambition overseas, founder

of Chinese electric car manufacturer NIO William Li

said on Thursday he plans to continue expanding in Europe even

with the uncertainty over tariffs.

He was in Amsterdam to open a new showroom in the busiest

part of the city.

LABOUR COSTS

Cutting labour costs has never been easy in Europe where

unions have political and legal levers to block layoffs.

"The quality of the dialogue that we have with European

unions is quite high," Tavares said. "They see the trap and they

see how we are trying to manage and to navigate through this

situation."

The threat of fewer auto jobs has mobilised European

politicians such as Italian Prime Minister Giorgia Meloni, who

wants Stellantis ( STLA ) to increase its annual output in Italy to one

million vehicles from around 750,000 in 2023, rather than move

production to low-cost countries.

Fiat Chrysler, which merged with France's PSA in 2021 to

create Stellantis ( STLA ), last produced more than one million vehicles

in the country - including passenger cars and light commercial

vehicles - in 2017.

Since the merger, Stellantis ( STLA ) has cut its European workforce

by 13% to around 125,000, mostly through voluntary lay-offs

agreed with unions and with more than half in Italy.

Volkswagen has a target to cut 10 billion euros ($10.8

billion) in costs by 2026, and some of those savings could come

through early retirement of workers, Chief Financial Officer

Arno Antlitz said at the Reuters Events conference on Thursday.

"Specifically our German plants have to prepare for tougher

competition," Antlitz said.

COMPETITIVE PRICES

Stellantis ( STLA ) is launching a small electric Citroen at 20,000

euros, which Tavares said was "at the right price" to compete

with Chinese automakers, whose hefty cost advantage is all too

clear to their European rivals thanks to partnerships between

the companies.

Stellantis' ( STLA ) global purchasing chief Maxime Picat said in an

interview in Munich that the automaker is pushing its suppliers

to match Chinese supplier costs, in part using data gathered

from its partnership with China's Leapmotor.

Tariffs can temporarily shrink or eliminate the cost

advantage Chinese automakers get from their supply chains.

But Germany's automakers warn that could come at a high

price if China goes beyond threats to slap duties on French

cognac and retaliates with tariffs on Mercedes-Benz,

VW or BMW vehicles made in Europe. Mercedes generates

about 16% of its global revenue in China.

For more on the battle with Chinese automakers over the

market for electric vehicles listen now to the Reuters Econ

World podcast.

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