How about fighting the competition by building better cars instead of seeking tax exemption?

Yea, no.

The writing's been on the wall for ages.

If you, as a major car manufacturer, still decide to outsource production there and now face the consequences of your own actions: that's on you.

They’ve outsourced the entire production of that car to a Chinese company. It’s built on a Chinese platform and uses subsidised Chinese supply chains. There is no way that they should be exempt.

But better cars would mean lower profits...

As long as they can sell enshittified piles of scrap for overinflated prices to douchebags who want to inflate their egos, there is no reason to build better cars.