Asger Risom
China’s automakers have found a way around the European Union’s punitive tariffs on electric vehicles. By flooding Europe with plug-in hybrids—vehicles not covered by the new duties—brands like BYD have seen sales skyrocket by an astonishing 17,000% in just six months.
China’s automakers have found a way around the European Union’s punitive tariffs on electric vehicles. By flooding Europe with plug-in hybrids—vehicles not covered by the new duties—brands like BYD have seen sales skyrocket by an astonishing 17,000% in just six months.
EU Slaps Tariffs on Chinese EVs
Earlier this year, the EU imposed steep tariffs on fully electric cars imported from China, in some cases as high as 45%. The move was meant to protect European automakers from being undercut by cheaper rivals.
Hybrids Slip Through the Net
The new duties, however, apply only to pure EVs. Plug-in hybrids and combustion-engine vehicles remain exempt, leaving a loophole that Chinese manufacturers have quickly exploited.
BYD Leads a Sales Explosion
According to Dataforce, BYD’s plug-in hybrid sales in Europe soared by 17,000% in the first half of 2025 alone. The surge shows how quickly Chinese automakers can pivot when confronted with trade barriers.
Pressure Mounts on European Automakers
The influx of low-cost hybrids puts additional pressure on European brands, which are already struggling with high production costs and slowing demand. Experts warn of a looming price war that could hit margins across the industry.
EU Considers Extending Tariffs
Brussels has acknowledged the loophole but has not yet decided whether to extend tariffs to cover hybrids. Industry observers say further measures are likely if Chinese imports continue to rise at the current pace.
China Builds Inside Europe
At the same time, Chinese manufacturers are investing in factories within the EU. Cars built inside Europe are exempt from import duties altogether—allowing brands like BYD to sell EVs tariff-free.
Beijing Holds Back—for Now
China has yet to formally retaliate against Europe’s tariffs. But officials have floated the idea of imposing duties on EU imports, particularly large petrol-powered vehicles, a move that could hurt brands like Porsche.
European Brands Losing Ground in China
While Europe braces for a wave of Chinese cars, its own automakers are struggling in China. Porsche and other luxury brands report falling sales, undermining their long-time reliance on the world’s largest auto market.
A Trade War in the Making
With China’s hybrids gaining ground in Europe and its EV factories moving closer to EU customers, the standoff is escalating. For Europe, the challenge is not just protecting its carmakers, but navigating a fast-changing global auto landscape.
