China and EU Explore Minimum EV Prices over Tariffs

The European Union and China have agreed to explore the introduction of minimum prices for Chinese-made electric vehicles in place of tariffs, according to Reuters. Negotiations are set to begin immediately, per China’s Ministry of Commerce.

In October 2024, the EU raised tariffs on Chinese-built electric vehicles, including a 17% rate on those produced by BYD and 35.3% on vehicles from SAIC, in addition to its standard car import duty. If a deal is reached, these tariffs could be replaced with minimum pricing.

The development comes amid global trade tensions in light of US President Donald Trump's 125% tariff on Chinese goods and 20% tariff on imports from the EU. Last week, it was announced that these measures would be suspended for 90 days.

President Hildegard Müller of the German automotive industry association VDA previously stated that the tariffs "represent the US' departure from the rules-based global trading order – and thus a departure from the foundation for global value creation and corresponding growth and prosperity in many regions of the world".

She added: "The announced measures also represent a massive burden and challenge for both companies and the global supply chains of the automotive industry.”

EV trade between China & the EU

More than 50,000 battery electric vehicles were shipped from China to the EU in January and February 2025, according to customs data.

Plug-in hybrids, which were not subject to EU tariffs, saw a surge of 892% over the same period, reaching 25,900 units.

Chinese manufacturers such as BYD held an 8% share of the EU battery electric vehicle market in 2023, but growth has slowed since the introduction of EU tariffs in 2024.

Only 11,499 battery electric vehicles were exported from the EU to China in 2023 and current trends suggest this stagnation is likely to continue.

Some Chinese companies are shifting towards local production within the EU, with BYD expected to begin building a plant in Hungary later in 2025.

The manufacturing impact of minimum EV prices

Setting minimum prices on Chinese-made electric vehicles would stop them from undercutting EU manufacturers, but could also make these cars less affordable for consumers.

European carmakers, such as Volkswagen and Stellantis, find it difficult to compete with China’s cost advantages, sometimes facing production costs that are 30–40% higher due to the impact of subsidies.

However, German manufacturers remain opposed to tariffs and there are concerns China could retaliate against premium European exports.

A minimum pricing agreement could further impact Tesla, which has already experienced a significant drop in European sales.

The company risks losing additional market share in the EU if Chinese electric vehicles see increased sales under such a deal.

The sustainability impact

In 2019, transport accounted for roughly a quarter of the EU’s total CO₂ emissions, with nearly 72% of that coming from road transport, according to the European Environment Agency.

Rising prices on Chinese EVs could raise overall costs and slow the pace of EV adoption, potentially extending the EU’s reliance on combustion engine cars.

New EU regulations require batteries to contain 50% recycled lithium by 2027, increasing to 80% by 2031. While this aims to reduce dependence on raw material extraction, it may place further pressure on global supply chains already adapting to tariffs.

Chinese companies manufacturing electric vehicles in the EU are expected to lower shipping emissions, but their overall environmental impact will depend on the energy mix used in production.

The EU is also concerned about the potential collapse of its clean energy technology sector due to the influx of Chinese imports.

While safeguarding domestic green technology could stimulate innovation, it may also lead to trade fragmentation.

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