by Chinese automakers are capturing the hybrid market in Europe
In June, Chinese brands captured 34% of the plug-in hybrid (PHEV) market in Europe. This came after tariffs on electric vehicles from China made importing battery-powered cars less attractive. PHEV sales rose, while the share of Chinese electric vehicles in Europe remained almost unchanged.
How Chinese brands circumvented tariff barriers
Tariffs on Chinese electric vehicles were meant to slow their advance in Europe. However, Chinese manufacturers responded by pivoting to plug-in hybrids, and the results speak for themselves. PHEVs from China now account for over a third of hybrid sales in the region. The tariff barrier remained in place, but the flow circumvented it, as restrictions applied to only one type of powertrain and not another.
Local sales data shows that Chinese companies captured 34% of the PHEV market in June, led by BYD, Chery, and Geely, as well as brands with European ties such as Polestar and Leapmotor.
Overall share of Chinese cars in the European market
According to Dataforce, Chinese manufacturers accounted for 11% of all new car sales in June and 15% of the electric vehicle market. The latter figure looks decent, but EV sales are not keeping pace with plug-in hybrids, fluctuating between 10% and 15% over the past 18 months.
If we consider the hybrid market as a whole, including conventional hybrids and plug-in hybrids, the share of Chinese automakers approached 25%.
Europe’s response: new tariffs on PHEVs
Europe’s response will likely involve not economic measures to support local manufacturers, but rather punishment of Chinese companies. The European Commission is moving closer to imposing tariffs on plug-in hybrids imported from China. As reported by Handelsblatt, once a majority of EU member states approve the new tariffs, they can be put into effect.
Tariffs on PHEVs are expected to be similar to those imposed on electric vehicles in 2024. They may vary depending on the manufacturer and the level of cooperation with European authorities. In the case of electric vehicles, tariffs range from 7.8% to 35.3%.
Chinese brands are building plants in Europe
Importantly, Chinese brands may already have an answer to the new tariffs. Many have already committed to building cars in Europe, including BYD, which now has a plant in Hungary, and SAIC, which will build a facility in northern Spain. Additionally, Auto News notes that Dongfeng, Chery, Geely, and Leapmotor may use existing plants in Europe to produce their own cars, bypassing potential new tariffs.
This localization strategy allows Chinese companies not only to avoid tariff barriers but also to strengthen their positions in the European market, creating jobs and integrating into the local economy. Thus, even if the EU imposes new restrictions, Chinese manufacturers already have a plan of action that will allow them to continue their expansion.
