EU Reportedly Preparing Tariff Rules for Chinese-Made PHEVs

The European Union is reportedly preparing tariff regulations targeting Chinese-made plug-in hybrid electric vehicles (Proll-in Hybrid Electric Vehicles/PHEV) following the implementation of tariff policies on Chinese-made electric vehicles.

When the European Union applied electric vehicle tariff policies in late 2024 to hinder the influx of cheap imported cars from China into its region, Chinese automotive manufacturers pivoted to selling PHEVs equipped with fuel tanks. Consequently, according to a report by Carscoops on Sunday (21/6), sales of Chinese brand hybrid vehicles in Europe have surged since then.

Now, the German business newspaper Handelsblatt reports that the European Union is preparing a new trade policy aimed at Chinese-made PHEVs. This move is seen as an expansion of the tariff war beyond pure electric vehicles, closing what many European automakers currently view as a loophole.

An industry executive told Handelsblatt that Chinese manufacturers quickly identified and exploited this gap. According to him, this “open loophole” must be closed by the European Union.

Handelsblatt reports that BYD PHEV registrations in Europe are increasing much faster than its electric vehicle sales this year. Chery has also shipped tens of thousands of PHEVs to Europe, only a small fraction of which are battery-based electric vehicles.

This trend is causing discomfort for European automakers, who are already struggling to maintain market share against the onslaught of the Chinese automotive industry, which now supplies one in every ten new cars sold in Europe.

The proposal to implement new tariff rules to curb the expansion of Chinese vehicle manufacturers in Europe is reportedly still under discussion. If approved by member states, these tariff rules could potentially be implemented in the coming months.

However, not everyone is certain that such a move will fully curb the expansion of Chinese car manufacturers in the European market. UBS analyst Patrick Hummel argues that imposing additional tariffs is unlikely to completely thwart China’s expansion plans, as profit margins in Europe remain highly attractive.

Furthermore, many automakers have begun moving their production facilities closer to European consumers. Some manufacturers are utilising underutilised factories of established companies such as Nissan or planning the construction of new local plants to avoid tariff issues.

Consumer acceptance and interest in Chinese brands in Europe continue to rise, even as governments become more open to implementing tougher trade measures to address concerns regarding industrial competitiveness.