China cuts hybrid exports to the EU by more than half

China has agreed to moderate exports of hybrid and plug-in hybrid cars to the European Union, in an understanding reached with Brussels that could lead to a reduction of more than 50% in the number of these vehicles sent to the European market.

The agreement comes at a time of growing trade tensions between the European Union and China, particularly following the introduction of additional customs duties on 100% electric cars produced in Chinese territory.

Following these measures, Chinese manufacturers significantly increased the presence of hybrid and plug-in hybrid models in the European market, precisely because these vehicles were not covered by the same tariffs applied to electric cars.

The evolution of imports ultimately increased concern among several European manufacturers and led Brussels to seek a negotiated solution with Beijing.

China and the European Union reach an understanding on hybrids

The negotiations were led by European Commissioner for Trade Maroš Šefčovič during a visit to Beijing.

At the end of the talks, the two sides reached an understanding to moderate Chinese exports of hybrid and plug-in hybrid cars destined for the European Union.

According to the information released, the aim could be to reduce the current volume of these exports by more than half.

The position represents a change from the beginning of the negotiations. At an earlier stage, China had rejected a European request to voluntarily limit hybrid car exports, leading Brussels to consider the possibility of imposing temporary quotas or new trade measures.

The understanding now reached could avoid, at least at this stage, a further escalation of the trade dispute between the two economies.

Tariffs on electric cars helped change the market

The origin of this dispute is linked to electric cars produced in China.

Following an investigation into the support granted by the Chinese state to electric vehicle manufacturers, the European Union decided to impose additional countervailing duties on imports from the country.

These tariffs are added to the standard 10% customs duty applied to cars imported from outside the European Union and vary depending on the manufacturer and the level of public support identified.

With Chinese electric cars subject to additional costs, several manufacturers increased their focus on hybrid and plug-in hybrid models, which were not covered by the same measures.

The growth in sales of these cars ultimately increased pressure on European manufacturers and led several countries, particularly Germany and France, to call for a firmer response from the European Commission.

The aim is to protect the European automotive industry while also reducing the significant trade imbalance between the European Union and China.

Agreement also involves rare earths and European products

The talks between Brussels and Beijing were not limited to the automotive sector.

China also agreed to facilitate the licensing process for exports of rare earths and permanent magnets to Europe. These materials are essential for several industrial sectors, including the production of electric motors, green technologies, electronic equipment and systems used by the automotive industry.

Another point discussed was improving access for European products to the Chinese market.

The products covered include automotive components, olive oil, food products and footwear, currently representing almost €4 billion in European exports to China.

According to estimates presented during the negotiations, these measures could represent at least €225 million in savings related to customs duties.

Despite the progress achieved, the agreement is seen only as the first stage of a broader process.

The trade deficit between the European Union and China remains one of Brussels’ main concerns, and the two sides are expected to continue negotiations over the coming months.

For the European automotive sector, the reduction in Chinese exports of hybrid and plug-in hybrid cars could help slow the rapid growth of these models in the EU market.

At the same time, the understanding demonstrates that the trade relationship between Europe and China will continue to have a direct impact on the automotive industry, at a time when manufacturers on both sides are seeking to gain ground in an increasingly competitive market shaped by the transition towards electrified mobility.

Sources: Observador, SIC Notícias, Euronews, RTP