China & EU Explore Replacing EV Tariffs with Minimum Prices
The European Union and China have initiated discussions to potentially implement minimum prices on Chinese-manufactured EVs according to Reuters.
This negotiation aims to replace the current tariff system, which has been a considerable point of tension in EV trade between the regions.
Negotiations are set to start immediately according to China’s Ministry of Commerce.
In October 2024, the EU increased tariffs on Chinese-built EVs, including 17% on those made by BYD and 35.3% for SAIC, on top of its standard car import duty.
If agreed, minimum prices could replace these.
This comes as US President Donald Trump is engaging in trade wars around the world, including a 125% tariff on Chinese goods and 20% on those from the EU – on 9 April it was announced these would be paused for 90 days.
President Hildegard Müller of German auto association VDA said on 2 April that the tariffs “represent the US's 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.
“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 the EU and China
More than 50,000 BEVs were shipped from China to the EU in January and February of 2025 according to customs data.
Plug-in hybrid vehicles, which are not subject to EU tariffs, saw an astonishing 892% increase to 25,900 units during the same period.
Chinese brands like BYD held 8% of the EU BEV market in 2023, but growth has slowed since the EU’s 2024 tariffs.
Conversely, only 11,499 BEVs were exported from the EU to China in 2023, and projections suggest that this stagnation will persist.
Some Chinese firms are moving to local production in the EU, with BYD expected to begin construction on a plant in Hungary later in 2025.
What could minimum prices mean?
Introducing minimum prices on Chinese-manufactured EVs could stabilise market competition by preventing them from underselling EU manufacturers.
However, there are concerns that this move might increase vehicle costs for consumers, potentially stalling EV adoption.
European manufacturers, including giants like Volkswagen and Stellantis, are already grappling with the challenge of China's cost advantages, owing partly to state subsidies, which can inflate EU production costs by 30-40%.
German automakers remain wary of tariffs due to potential retaliations that could affect premium exports.
A pricing agreement could also have repercussions for companies like Tesla, which has experienced a drop in European sales.
An increase in sales of Chinese vehicles could exacerbate this trend and diminish Tesla's market position.
How could China EU EV trade impact the environment?
Transport was responsible for around a quarter of the EU’s total CO₂ emissions in 2019, and nearly 72% of this came from road transportation according to the European Environment Agency.
Elevating prices on Chinese EVs could hinder the push towards cleaner vehicle adoption, inadvertently extending the life of combustion engine vehicles on EU roads.
The EU has set ambitious targets for battery sustainability, mandating that batteries contain 50% recycled lithium by 2027, with this figure set to rise to 80% by 2031.
While this reduces dependence on raw materials, the adjustment amid tariff shifts could create supply chain challenges.
Chinese firms producing EVs within the EU could cut emissions tied to vehicle shipping, but the overall ecological impact will vary based on the energy sources used in vehicle production.
The EU is also concerned about safeguarding its green technology industry against an influx of Chinese imports.
Although this protective stance might spur innovation domestically, it risks fragmenting international trade relationships.
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