EU tariffs on Chinese electric vehicles backfire, boosting hybrid imports and market share

The European Union’s attempt to blunt a wave of low‑cost Chinese electric vehicles by imposing targeted tariffs has had an unintended consequence: instead of forcing Chinese manufacturers to localise production, the measures appear to have encouraged a strategic pivot that keeps imports flowing and undercuts the policy’s aims.

According to the original report, additional duties introduced in November last year , levying up to 35 percent on Chinese‑made battery electric vehicles on top of the existing 10 percent common external tariff , were designed both to protect European carmakers and to create an incentive for Chinese firms to build factories inside the EU. Rather than accelerating large‑scale plant openings, the levy has opened a loophole. Hybrid and internal combustion engine models remain subject only to the standard 10 percent duty, and many Chinese brands have shifted their European offers into those categories to avoid the heavier penalties.

“The EU decision left a big hole open for full hybrids and even hybrids coming from China,” Jeffries managing director Philippe Houchois told Auto News. He added that the decision to target a specific technology “was ill‑fated”, and market data supports his point: whereas Chinese brands’ EV share of their Europe sales was 44 percent for January–October 2024, that proportion had slipped to roughly 34 percent in 2025 as manufacturers moved into hybrids and ICE variants.

Market figures show Chinese marques’ penetration of Europe’s passenger car market rising sharply in 2025. Industry data indicates Chinese‑brand sales reached roughly 462,935 units between January and August , about 5.3 percent market share, up from 3.2 percent the year before , and September produced a record monthly total of around 94,000 units, representing 7.6 percent market share. Taken together with subsequent months, the tally for the EU, the UK and EFTA is expected to exceed 700,000 units this year, up from some 408,000 in 2024.

Part of the dynamic is commercial logic: production costs in China remain substantially lower than in Europe , estimates cited in the market commentary put the gap at as much as 30 percent , so exporting models that escape the higher EV tariff can be more profitable than investing in new European factories solely to avoid duties. That calculation helps explain why fewer than 20,000 Chinese‑brand vehicles are expected to be assembled in Europe this year and why planned European plants remain the exception rather than the rule.

A handful of manufacturers are moving ahead with local production. BYD is advancing a large factory in Hungary with projected capacity of up to 150,000 units a year, while Chery has commissioned a plant in Spain and some brands , including Chery, Xpeng and GAC , already undertake limited local assembly. Leapmotor has signalled plans to build the B10 in Spain and Great Wall Motor has publicly outlined ambitions to produce up to 300,000 vehicles in Europe by 2029, but most commitments remain at the announcement stage rather than delivering immediate capacity.

The policy trade‑offs are clear. Targeting a single drivetrain technology aimed to address concerns about alleged subsidies and rapid scaling by Chinese EV manufacturers , concerns that prompted countervailing duties averaging about 20.8 percent in some accounts , but by focusing on EVs the EU left room for substitution into hybrids and ICE models. Export data from late 2024 also suggested that broader Chinese auto exports to the EU climbed despite the duties, adding to evidence that the tariffs alone have not halted market penetration.

For European industrial decarbonisation strategy, the ramifications are twofold. In the short term, the pivot to hybrids blunts some of the competitive pressure on European battery production and EV supply chains but also prolongs reliance on fossil‑fuel technology in a market that needs deep electrification to meet climate targets. In the medium term, the outcome will depend on whether announced European plants materialise at scale and on whether policymakers adjust trade measures or complementary industrial incentives , for example, stronger support for battery gigafactories, procurement rules favouring local content, or stricter subsidy assessments , to close the loopholes that exporters are currently exploiting.

The company claims and official aims that underpinned the tariffs have therefore produced a mixed result: the duties have raised the cost of some Chinese EV imports, but industry data and market behaviour show manufacturers and consumers adapting in ways that preserve growth in Chinese brand sales across Europe. Until more European‑based production comes on stream, and until policy is recalibrated to account for substitution effects, Chinese automakers will likely continue to use the tariff structure to sustain and expand their foothold in European markets.