Chinese Automakers Evade European Penalties Through Utilization of Loophole
In the rapidly evolving world of electric vehicles (EVs), Chinese manufacturers are making a deliberate adjustment to European market conditions. This shift comes in response to tariff barriers and the anticipation of a price war among Chinese competitors.
Currently, tariffs for electric SUVs like the BYD Atto 3 stand around 10,000 euros, while for plug-in models like the SAIC "Seal U", they are only around 4,000 euros. This significant difference in tariffs is a strategic move by Chinese manufacturers to offer competitive pricing for plug-in models, providing a substantial price advantage over comparable offers from established European brands like Volkswagen or Toyota.
For EVs, tariffs at SAIC are over 45 percent. However, this high tariff does not seem to deter Chinese manufacturers, as they continue to expand their presence in the European market. The strategic shift towards plug-in hybrids, which face lower tariffs, is a clear indication of this.
Besides BYD, other Chinese automakers like Geely and SAIC (which also owns the MG brand) are producing plug-in hybrids for Europe to circumvent EU tariffs on electric vehicles. MG, in particular, has seen a significant increase in plug-in hybrid registrations in the EU in 2025, while battery electric vehicle (BEV) registrations have declined. This trend suggests a strategic shift towards hybrid models to avoid the up to 35% tariff on pure electric cars from China.
The EU Commission is pushing for a negotiated solution with China, but individual EU parliamentarians like Michael Bloss (Greens) call for extending the punitive tariffs to plug-ins as well. However, new tariffs for plug-in hybrids would require another anti-subsidy proceeding, according to the EU Commission.
Discussed solutions to address this issue include minimum prices and full production sites in Europe. These measures aim to level the playing field and ensure fair competition between Chinese and European manufacturers.
As the price war among Chinese manufacturers in the European market heats up, it will be interesting to see how this strategic shift towards plug-in hybrids and the potential introduction of new tariffs will impact the EV landscape.
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