On Monday, China and the European Union announced an agreement outlining steps to address their ongoing dispute concerning the EU’s imports of Chinese-made electric vehicles (EVs). The EU issued a “guidance document” providing comprehensive instructions for Chinese EV manufacturers on submitting price offers for battery-electric cars.
This document includes details such as the establishment of minimum import prices. In 2024, the EU implemented tariffs of up to 35.3% on Chinese EV imports following an anti-subsidy investigation. The EU has indicated that the minimum import prices should be set at a level that effectively mitigates the negative impacts of subsidisation. Furthermore, the investment plans of Chinese EV manufacturers within the EU will also be taken into account in this process.
“The European market is open to electric vehicles from all around the world, provided that they have come here according to that level playing field,” said European Commission spokesperson Olof Gill. “If those conditions are met, then we can seriously look at price undertakings.”
The European Union announced that the European Commission will evaluate each offer in an “objective and fair manner,” in accordance with the principles of non-discrimination and the rules of the World Trade Organisation.
A statement from China’s Commerce Ministry emphasised that this approach not only promotes the healthy development of economic and trade relations between China and the EU but also helps to uphold the rules-based international trade order. The China Chamber of Commerce to the EU expressed its support for this initiative, stating that it would lead to a “soft landing” in the ongoing EV dispute.
The EU’s investigation and tariffs on Chinese EVs have strained relations with China. In late 2024, the EU imposed countervailing tariffs of 7.8% to 35.3% on imports of Chinese battery EVs for five years, citing concerns over unfair subsidisation from the Chinese government that threatens European manufacturers. This announcement followed the EU’s review of whether a pricing commitment from the Volkswagen Group’s Chinese joint venture could replace these tariffs.
“The minimum prices offer Chinese brands probably some comfort to continue their exports long term … while avoiding higher import tariffs,” said Rico Luman, a senior economist at the Dutch bank ING who focuses on transport, logistics and the automotive industry. “I’m convinced the inroads of Chinese brands will continue.”
European manufacturers rely heavily on Chinese batteries, rare-earth materials, and computer chips, necessitating careful trade relations with China, according to Luman. Stephen Chan from S&P Global Ratings stated that demand for Chinese-built vehicles may decline if new price guidelines reduce the gap between Chinese BEVs and European models.
Analysts expect Chinese car brands to increase their market share in Europe, with Chinese-made cars comprising 6% of EU sales in the first half of 2025, up from 5% in the same period of 2024, according to ACEA and S&P Global Mobility. EU manufacturers accounted for 74% of the total market, with Germany accounting for about 20% of EU car sales. By 2030, AlixPartners predicts Chinese automakers will double their European market share to around 10%.
This article used information from The Associated Press.
