Chinese Automakers Challenge EU EV Tariff with Hybrid Exports to Europe

Chinese automakers are demonstrating the limitations of the European Union's electric vehicle tariff scheme by increasing their exports of hybrid cars to Europe and preparing further models for the important market.

In an effort to cut costs related to tariffs, several businesses are now moving their assembly and production to Europe.

Murtuza Ali, an analyst at Counterpoint Research, said, "The increase is driven by Chinese OEMs shifting toward PHEVs (plug-in hybrids) as a way to sidestep the new EU tariffs on BEV (battery-powered EVs) imports from China"

He predicts a 20% increase in China's hybrid exports to Europe this year and perhaps a higher rate the next year.

In an effort to combat what the European Commission claims are unfair subsidies that enabled China to develop spare production capacity for 3 million EVs annually, twice the size of the EU market, EU tariffs of up to 45.3% on Chinese EV imports went into force in late October.

Hybrid vehicles, which use both electricity and gasoline, are becoming more and more popular as consumers view them as an economical alternative to all-electric or all-combustion vehicles.

According to data released by the China Passenger Car Association, hybrid exports to Europe from July to October more than tripled to 65,800 units compared to the same period last year, reversing a trend of declining sales until earlier this year and in 2023.

As a result, in the third quarter, China's total vehicle sales to Europe accounted for 18 percent of plug-in hybrid and conventional hybrid exports, up from 9 percent in the first quarter. However, within the same time period, the percentage of EV shipments decreased from 62% to 58%.