Chinese automakers are intensifying efforts to export hybrid vehicles to Europe and introducing more models tailored for the region. Industry experts believe this reflects the limitations of the European Union’s new electric vehicle (EV) tariff scheme.
The EU’s recent tariffs, designed to shield European automakers from low-cost Chinese EV imports, notably exclude hybrids. Analysts quoted by the Financial Times suggest that leading brands like BYD, China’s top EV manufacturer, are well-positioned to expand their presence in Europe despite these regulations.
Some Chinese manufacturers are relocating production and assembly to Europe to minimize tariff-related costs. This strategic shift aligns with an increased focus on plug-in hybrid electric vehicles (PHEVs) to circumvent the new tariffs imposed on battery electric vehicles (BEVs) imported from China.
Hybrid exports to Europe are projected to rise by 20% in 2024, following substantial growth this year.
EU tariffs of up to 45.3%, introduced in October, target Chinese EV imports, citing “unfair subsidies” that have led to an annual surplus production capacity of 3 million EVs in China.
Hybrid exports from China to Europe between July and October 2023 surged over threefold year-on-year to 65,800 units, according to the China Passenger Car Association.
Hybrid vehicles, which combine petrol and electric power, are gaining traction among European consumers as a cost-effective middle ground between traditional combustion engines and fully electric cars.
During the third quarter of 2023, hybrids (PHEVs and conventional) comprised 18% of China’s vehicle exports to Europe, up from 9% in Q1. The share of BEVs in Chinese exports to Europe decreased from 62% to 58%.
This trend underscores a broader shift as Chinese automakers adapt their strategies to align with European market dynamics and regulatory landscapes.
Analysts note that China, which surpassed Japan as the world’s largest car exporter in 2022, is intensifying its export efforts to address domestic overcapacity. With tariffs on Chinese-made EVs reaching 100% in the U.S. and Canada, Europe remains a crucial market for Chinese carmakers.
However, as Chinese hybrids gain ground in Europe, the risk of triggering additional EU tariffs looms. Experts suggest that Chinese companies are likely to proceed cautiously to avoid exacerbating trade tensions.
The European Commission has yet to comment on the rising influx of hybrid imports from China.
