Europe Opens Door to Chinese Electric Vehicle Price Deals Instead of Steep Tariffs

2026-01-12 green

Brussels, Monday, 12 January 2026.
The European Union released new guidelines on January 12, 2026, allowing Chinese electric vehicle manufacturers to propose minimum pricing agreements as an alternative to tariffs reaching up to 45.3 percent.

Framework for Minimum Price Agreements

The European Commission’s guidance document establishes a structured pathway for Chinese automakers to submit price undertaking offers that could replace the countervailing duties imposed in October 2024 [1]. These minimum import prices must be set at a level appropriate to remove the injurious effects of subsidization, according to the Commission’s requirements [1]. Chinese manufacturers including BYD, Geely, and SAIC currently face individual tariff rates ranging from 17.0% to 35.3%, which when combined with the EU’s standard 10% import duty, create total barriers of up to 45.3 percent [7]. The framework allows companies to strengthen their proposals by committing to annual shipment volumes and planned future investments within the EU [3].

Market Impact and Strategic Positioning

Chinese electric vehicle manufacturers have demonstrated remarkable growth momentum in European markets despite regulatory barriers. BYD’s European registrations surged by 221.8% in November 2025, contrasting sharply with Tesla’s 11.8% decline during the same period [8]. China-manufactured vehicles accounted for 6% of EU sales in the first half of 2025, representing an increase from 5% in the corresponding 2024 period [4]. The dispute’s resolution carries particular significance as Europe imported 11.5 billion worth of battery-powered cars from China in 2023, a dramatic escalation from just 1.6 billion in 2020 [4].

Investment Commitments and Future Production

Several Chinese manufacturers are already establishing European production capabilities to navigate regulatory challenges. BYD is constructing a manufacturing facility in Hungary, where it has established its European headquarters, with production expected to commence in 2027 featuring the Dolphin Surf as the debut model [7]. XPeng completed test production in Austria on January 5, 2026, while Nio indicated it would evaluate local assembly if monthly sales reach approximately 6,000 units [7]. Changan Automobile, which launched European sales in late 2024 through Norway and Germany, aims to enter at least 10 European markets by the end of 2026 and establish continent-wide operations by 2028 [7].

Bronnen

electric vehicles trade policy